Fundamental Overview
Gold continues its parabolic surge amid the lack of bearish catalysts. Right now, it’s just a momentum play. The uncertainty around the renewed US-China trade war, some concerns around regional bank loans and money markets stress, continues to add support for the market.
If financial conditions tighten because of these concerns though, we could see gold actually falling. This is what generally happens in extreme conditions as inflation expectations crumble.
Nevertheless, the buyers might want to decrease risk here or at least bet with lower size as such quick spikes into a parabolic surge like we’ve seen tonight generally precede tops.
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.
Gold Technical Analysis – Daily Timeframe
On the daily chart, we can see that gold extended into yet another all-time high 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 on this timeframe. If we were to get a pullback into it, we can expect the buyers to lean on the trendline with a defined risk below it to position for a rally into new highs. The sellers, on the other hand, will want to see the price breaking lower to extend the 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. The buyers will likely lean on the trendline to keep pushing into new highs, while the sellers will look for a break lower to target the next trendline around the 4,050 level. We have also a minor resistance around the 4,380 level. If the price breaks above it, we could see the buyers increasing the bullish bets again to target new highs. The red lines define the average daily range for today.
Upcoming Catalysts
We don’t have anything on the agenda today with the focus remaining on US-China developments and now on regional banks and money market rates.
