FUNDAMENTAL OVERVIEW
Gold continues to erase the NFP gains as traders await the US CPI report. Moreover, we got an escalation in the Middle East as the US launched a series of strikes on Iran in response to Iranian attacks on three vessels in the Strait of Hormuz. Iran retaliated by bombing US bases in Bahrain and Kuwait, warning of further strikes if the US continued.
The markets went into risk-off and we saw a slightly hawkish repricing in interest rate expectations across the board as oil prices spiked. This episode should be over now, and we might see some pullbacks, but the risk that things could worsen is always present.
The US CPI remains the biggest event this month. Even though the bearish pressure should persist, gold might remain rangebound until we get to the main event.
Today, we have the FOMC meeting minutes. This is almost never a market moving report but given the limited forward guidance from Fed Chair Warsh, traders will want to see if there’s any further signal in the minutes on the next policy move.
GOLD TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can see that gold is trading near the major downward trendline. If the price gets there, we can expect the sellers to lean on the trendline with a defined risk above it to position for a drop into new lows. The buyers, on the other hand, will want to see the price breaking higher to increase the bullish bets into the next trendline around the 4,500 level.
GOLD TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, we can see that the price pulled back to retest the 4,095 support. This is where we can expect the buyers to step in there with a defined risk below the support to keep pushing into new highs. The sellers, on the other hand, will want to see the price falling back below the 4,095 level to pile back in and target new lows.
GOLD TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, we now have a downward trendline defining the current pullback. The sellers will likely continue to lean on it to keep pushing into new lows, while the buyers will want to see a break to increase the bullish bets into the major downward trendline. The red lines define the average daily range for today.
UPCOMING CATALYSTS
Today, we have the FOMC meeting minutes. Tomorrow, we get the latest US Jobless Claims figures.