FUNDAMENTAL OVERVIEW
Gold fell to a new two-month low this week as the lack of tangible progress on the US-Iran side and the hawkish Fed risks continue to weigh on the precious metal.
Despite the expectations for an imminent deal and the reopening of the Strait of Hormuz, we still haven’t got anything officially. There’s just been lots of noise. Moreover, in the past few days, the US and Iran exchanged limited military strikes, but the US side continues to say that the ceasefire remains intact.
On the Federal Reserve side, more and more policymakers are now pushing for dropping the easing bias, so we can expect that to happen at the June FOMC meeting. Moreover, if nothing changes on the US-Iran side before then, we might get a hawkish surprise as inflation continues to run hot and the US data remains resilient.
In the short-term, a resolution and the reopening of the Strait will likely support gold on falling oil prices and increased rate cut bets. But if the Strait remains closed for longer and oil prices stay elevated, the risk of the Fed being forced to hike anyway increases.
GOLD TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can see that gold dropped to a new two-month low this week and it’s approaching the major upward trendline. If the price gets there, we can expect the buyers to step in with a defined risk below the trendline to position for a rally into the major downward trendline. The sellers, on the other hand, will look for a break to increase the bearish bets into the 3,885 level next.
GOLD TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, we can see the price almost reached the key 4,350 level. We can expect the buyers to step in there with a defined risk below the level to position for a pullback into the downward trendline. The sellers, on the other hand, will look for a break to increase the bearish bets into the major upward trendline.
GOLD TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, we have another minor downward trendline defining the bearish momentum on this timeframe. The sellers will likely continue to lean on the trendline with a defined risk above it to keep pushing into new lows, while the buyers will look for a break above the trendline to extend the pullback into the next trendline. The red lines define the average daily range for today.
UPCOMING CATALYSTS
Today, we get the latest US Jobless Claims figures and the US PCE price index.
