Fundamental Overview
Gold had a positive day on Friday as it found support from the risk-off sentiment caused by Trump’s threat of substantially increasing tariffs on China. Over the weekend, we had more soothing comments from Trump and other US officials which triggered a recovery in risk sentiment.
Despite the positive risk sentiment, gold started the week on a positive note and extended the gains into a new all-time high this morning. The market has been mostly driven by inertia given the lack of bearish catalysts.
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 will likely trigger a correction, but for that we will need strong US labour market data or a hot US CPI next week.
Gold Technical Analysis – Daily Timeframe
On the daily chart, we can see that gold had a positive day on Friday following Trump’s threat of a substantial increase in tariffs on China. 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 the price bounced near the 3,939 level and extended the rally into a new all-time high this morning. From a risk management perspective, the buyers will have a better risk to reward setup around the trendline to position for further upside, while the sellers will look for a break lower to target a deeper pullback into the 3,819 level next.
Gold Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price already reached the upper bound of the average daily range for today. This doesn’t mean it cannot continue, but we can usually see some consolidation or a pullback at such limits. In this case, if the price fall back below the previous all-time high at 4,059, we can expect the sellers to pile in to position for a drop into the trendline. The buyers, on the other hand, will likely continue to step in around these levels with a defined risk below the 4,059 level to keep pushing into new highs.
Upcoming Catalysts
This week is going to be very light again in terms of data releases given the US government shutdown. Data like Retail Sales and Jobless Claims won’t be released. We will have lots of Fed speakers though with Fed Chair Powell scheduled for tomorrow. Given the lack of key US data though, it’s very unlikely to see a change in stance. For now, we know that only the US CPI will be published despite the shutdown, which is scheduled for Friday October 24.
