Fundamental
Overview
There hasn’t been any
catalyst this week for the rally in gold although we had a key technical
breakout which might have increased the bullish momentum.
The lack of bearish
catalysts though is helping to keep the bid going as the market has finished to
reprice the aggressive rate cuts expectations that weighed on gold in the past
weeks as it contributed to lift real yields.
In fact, in the bigger
picture, gold remains in a bullish trend as real yields will likely continue to
fall amid the Fed’s easing cycle. The pullbacks will likely be triggered by a
repricing in rate cuts but unless the Fed’s reaction function changes, the
uptrend should remain intact.
One key event which could
trigger a strong selloff in gold is the upcoming US election. In fact, a Trump
victory will likely raise real yields on higher growth and less rate cuts
expectations. So, definitely mark that on the calendar.
Gold
Technical Analysis – Daily Timeframe
On the daily chart, we can
see that gold bounced near the key trendline and it’s now approaching the
all-time high around the 2685 level. The buyers will want to see the price
breaking higher to increase the bullish bets into new highs, while the sellers
will likely step in around the all-time high to position for a pullback into
the trendline.
Gold Technical Analysis
– 4 hour Timeframe
On the 4 hour chart, we can
see that we had some choppy price action around the counter-trendline but
eventually the buyers prevailed. We now have another minor upward trendline defining
the current bullish momentum. If we were to get a pullback, the buyers will
likely lean on it to position for new highs, while the sellers will look for a
break lower to target a drop into the major trendline.
Gold Technical Analysis
– 1 hour Timeframe
On the 1 hour chart, we can
see that we have another minor upward trendline defining the bullish momentum
on this timeframe. The buyers will keep on leaning on the trendline for more
upside, while the sellers will look for a break lower to target new lows. The
red lines define the average daily range for today.
Upcoming
Catalysts
Tomorrow we have the US Retail Sales and US Jobless Claims data.
See the video below
This article was written by Giuseppe Dellamotta at www.forexlive.com.
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