Fundamental Overview
Gold extended the gains in the first part of the week after another soft NFP report on Friday. The increase in the dovish bets on the Fed continued to drive real yields lower supporting higher prices for gold.
This week, we get the US inflation data with the US PPI today and the US CPI report tomorrow before the FOMC meeting next week. A 25 bps cut is absolutely unavoidable now, but soft inflation data could see the probabilities for a 50 bps cut to increase. In that case, gold should get another boost.
In the bigger picture, gold should remain in an uptrend as real yields will likely continue to fall amid Fed easing given their dovish reaction function. In the short-term though, hawkish repricing in interest rates expectations will likely keep on triggering corrections.
Gold Technical Analysis – Daily Timeframe
On the daily chart, we can see that the momentum stalled a bit recently as depicted also by the shooting star candle. From a risk management perspective, the buyers will have a better risk to reward setup around the major trendline at the 3,400 level, while the sellers will look for a break lower to extend the drop into the 3,120 level next.
Gold Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have a minor 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 keep pushing into new highs. The sellers, on the other hand, will look for a break lower to increase the bearish bets into the major trendline around the 3,400 level.
Gold Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have yet another minor upward trendline defining the bullish momentum on this timeframe. Again, the buyers will continue to lean on it to keep pushing into new highs, while the sellers will look for a break lower to target the next trendline. The red lines define the average daily range for today.
Upcoming Catalysts
Today we have the US PPI report. Tomorrow, we get the US CPI report and the latest US Jobless Claims figures. On Friday, we conclude the week with the University of Michigan Consumer Sentiment report.
