FUNDAMENTAL OVERVIEW
Gold bounced on Thursday after a couple of de-escalatory looking news turned the risk sentiment around.
Unfortunately, the mood soured on Friday as Wall Street Journal reported that the US was sending warships and thousands of additional marines to the Middle East despite Trump’s assurances that he won’t put American boots on the ground in Iran.
CBS news later doubled down on the reports saying that Trump’s administration was making heavy preparations for potential use of ground troops in Iran.
Over the weekend, Trump issued an ultimatum to Iran to reopen the Strait of Hormuz within 48 hours or face strikes on key infrastructure. The ultimatum is set to expire this late evening, but it doesn’t look like Iran is going to follow through at all, so that will keep traders on edge.
For now, tighter financial conditions and the hawkish repricing are weighing on gold. This pressure is likely to persist unless we get a clear de-escalation between the US and Iran.
GOLD TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can see that gold eventually broke out of the trendline around the 4,650 level and extended the drop into new lows as the major trendline around the 4,000 level came into sight. If the price gets there, we can expect the buyers to step in with a defined risk below the 3,883 level to position for a rally back into new all-time highs. The sellers, on the other hand, will look for a break lower to increase the bearish bets into the 3,400 level next.
GOLD TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, we have a downward trendline defining the bearish momentum. If we get a pullback, we can expect the sellers to lean on the trendline with a defined risk above it to keep pushing into new lows. The buyers, on the other hand, will look for a break higher to pile in for a rally back into the 4,700 level.
GOLD TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, we have another minor downward trendline defining the bearish momentum on this timeframe. If we get a pullback, we can expect the sellers 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 higher to pile in for a rally into the next trendline. The red lines define the average daily range for today.
UPCOMING CATALYSTS
Tomorrow we have the US PMIs. On Thursday, we get the latest US Jobless Claims figures. As a reminder, the focus is mainly on the US-Iran war, so keep an eye on the headlines.
