Fundamental Overview
Gold extended the rally into yet another all-time high today as the lack of bearish catalysts keeps the bullish momentum going. The market continues to move by inertia, and given the US government shutdown, there’s not much stopping this train. Even the US CPI report could be delayed if the shutdown stretches into next week.
The only risk for gold is the Fed and a hawkish repricing in interest rates expectations but the shutdown keeps those risks away by delaying the release of key data and not giving the Fed members much to work with.
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. In the short-term though, a hawkish repricing in interest rates expectations caused by strong US labour market data will likely trigger a correction.
Gold Technical Analysis – Daily Timeframe
On the daily chart, we can see that gold extended the rally into yet another all-time high today as the lack of bearish catalysts keeps the bullish momentum intact. This rally went so much parabolic that it’s basically useless to look at the daily timeframe at the moment, so we need to zoom in to see some more details.
Gold Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have an upward trendline defining the bullish momentum. If we get a pullback into the trendline, we can expect the buyers to lean on it with a defined risk below it to position for a rally into a new all-time high. The sellers, on the other hand, will want to see the price breaking lower to pile in for a drop into new lows.
Gold Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have another minor upward trendline defining the bullish momentum on this timeframe. Again, we can expect the buyers to lean on it with a defined risk below it to position for a rally into a new all-time high. The sellers, on the other hand, will look for a break lower to extend the pullback into the 3,940 level and upon a further break lower into the next trendline. The red lines define the average daily range for today.
Upcoming Catalysts
Today we get the FOMC meeting minutes. Tomorrow, we have Fed Chair Powell speaking and the US Jobless Claims (if the shutdown is lifted). On Friday, we conclude the week with the University of Michigan Consumer Sentiment report.
