FUNDAMENTAL OVERVIEW
Gold has been stuck in a consolidation for almost a month now despite lower real yields, looser financial conditions and a weaker US dollar. The main thing that’s been capping the bullish momentum has been the more hawkish Fed's stance.
This is unlikely to change anytime soon as even if the US-Iran war officially ends and the Strait of Hormuz is reopened, the increase in economic activity might keep inflation higher for longer and force the Fed to hold rates steady.
Nonetheless, the reopening of the Strait should give the market a boost in the short-term as it would ease some inflation worries and bring back rate cut expectations. After that though, traders will be focused on economic data and the Fed’s stance.
GOLD TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can see that gold continues to consolidate amid the US-Iran stalemate. The natural target for the buyers remains the downward trendline around the 5,000 level. If the price gets there, we can expect the sellers to step in with a defined risk above the trendline to position for a drop into the major upward trendline around the 4,200 level. The buyers, on the other hand, will look for a break to extend the rally into the 5,400 level next.
GOLD TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, we can see the price broke above the minor downward trendline that was defining the pullback. The swing level at 4,772 might now act as resistance. The sellers will likely step in there with a defined risk above the resistance to keep pushing into the 4,552 level. The buyers, on the other hand, will look for a break to increase the bullish bets into the 5,000 level next.
GOLD TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, we can see more clearly the recent price action. We might get stuck in range here between the 4,670 support and the 4,772 resistance. The market participants will wait for a breakout on either side to pick a direction. The red lines define the average daily range for today.
UPCOMING CATALYSTS
Tomorrow we get the US Consumer Confidence report. On Wednesday, we have the FOMC policy decision. On Thursday, we get the US Q1 GDP, the US Employment Cost Index and the latest US Jobless Claims figures. On Friday, we conclude the week with the US ISM Manufacturing PMI.
