Fundamental Overview
Gold got stuck in a consolidation after last week’s selloff as market participants waited for more clarity on the renewed US-China trade war. Over the weekend, we got very positive comments from US Treasury Secretary Bessent saying that they reached a consensus with the Chinese on many key topics.
Market participants now look forward to Thursday when Trump and Xi are scheduled to meet. The two leaders are expected to confirm the preliminary deal. The positive risk sentiment going into the meeting could weigh on gold in the short-term but we will likely need a breakout of the recent range to trigger a more sustained trend.
In the bigger picture, gold should remain in an uptrend as real yields will likely continue to fall amid the Fed’s dovish reaction function. But in the short term, a hawkish repricing in interest rate expectations could trigger a correction.
Gold Technical Analysis – Daily Timeframe
On the daily chart, we can see that gold is consolidating right at the major upward trendline around the key 4,000 level. The buyers will likely continue to step in here with a defined risk below the trendline to position for a rally into new all-time highs. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the next major trendline around the 3,600 level.
Gold Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more clearly the recent rangebound price action at the trendline. Again, the buyers will likely step in around the trendline to position for new highs, while the sellers will look for a break lower to target new lows.
Gold Technical Analysis – 1 hour Timeframe
On the 1 hour chart, there’s not much else we can add here. Market participants will likely continue to play the range until we get a breakout on either side. The red lines define the average daily range for today.
Upcoming Catalysts
On Wednesday we have the FOMC policy decision, while on Thursday, we have the Trump-Xi meeting.
