Fundamental Overview
We had a wave of profit-taking yesterday on gold and other precious metals that wasn’t triggered by any clear catalyst. Maybe silver making the headlines for breaking into a new all-time high caused it, but there was no fundamental catalyst.
For now, the market continues to move by inertia, and given the US government shutdown, there’s not much stopping this train. The BLS announced that it will release the US CPI report despite the shutdown, but it will likely be postponed from the original date.
That might be a risk for the bulls as higher than expected data could trigger a hawkish repricing and lead to a bigger pullback.
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.
Gold Technical Analysis – Daily Timeframe
On the daily chart, we can see that gold had a negative day yesterday due to some profit-taking. 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. The buyers will likely lean on the trendline with a defined risk below it to keep pushing into new all-time highs. The sellers, on the other hand, will look for a break lower to extend the pullback into the 3,819 level next.
Gold Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a minor resistance zone around the 4,000 level. That’s where we can expect the sellers to step in with a defined risk above the resistance to position for a break below the trendline. The buyers, on the other hand, will look for a break higher to increase the bullish bets into new highs. The red lines define the average daily range for today.
Upcoming Catalysts
Today we conclude the week with the University of Michigan Consumer Sentiment report.
