FUNDAMENTAL OVERVIEW
Gold pared back Monday’s gains yesterday as the price pulled back to retest the broken 5100 level. The bullish momentum from the Friday’s US Supreme Court decision seems to have already waned, which is something we expected given no changes to the big picture.
In fact, Trump has already imposed new tariffs under a different law and the tariff deals remain in place. The new levies actually reduce the effective average tariff rate, so at the margin it could be a positive.
The market might remain supported in the short-term amid some uncertainty, but I don’t see material changes to justify a rally back to all-time highs, at the moment. The real risks remain a potential US-Iran military escalation which could take gold prices to new highs or a hawkish repricing on stronger US data which would have a negative effect on the market.
Fed’s Waller mentioned that he would change his dovish stance in case the strong January’s jobs data is repeated in February, so next week’s NFP report is going to be a key risk event for gold.
GOLD TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, we can see the price pulled back to retest the broken resistance now turned support around the 5100 level. The buyers stepped in around the support with a defined risk below it position for a rally into new all-time highs. The sellers will want to see the price falling back below the support to pile in for a drop into the trendline.
GOLD TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, we can see a minor upward defining the bullish momentum on this timeframe. The buyers will likely continue to lean on the trendline and the 5100 support to keep pushing into new highs, while the sellers will look for a break below the support to extend the pullback into the next trendline around the 5000 level. The red lines define the average daily range for today.
UPCOMING CATALYSTS
Tomorrow we get the latest US Jobless Claims figures and the third round of US-Iran talks. On Friday, we conclude the week with the US PPI report.
