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 is just moving 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.
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. From a risk management perspective, the buyers will have a better risk to reward setup around the major trendline, while the sellers will look for a break lower to extend the drop into the 3,120 level next. Such a big correction though, will need strong US labour market data to trigger a hawkish repricing in interest rates expectations.
Gold Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have another upward trendline defining the bullish momentum on this timeframe. 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 the 3,718 level next.
Gold Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a minor support zone around the 3,895 level. If we get a pullback, we can expect the buyers to step in around the support with a defined risk below it to keep pushing into new highs. The sellers, on the other hand, will look for a break lower to extend the pullback into the trendline next. The red lines define the average daily range for today.
Upcoming Catalysts
On Thursday, 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.
