Fundamental Overview
Gold managed to extend the rally into yet another all-time high yesterday despite lack of meaningful catalysts this week. We got a very weak US ADP report yesterday but that didn’t trigger another rally despite the market pricing turning more dovish. The ISM Manufacturing PMI was overall good with a higher employment index and a lower inflation index.
Unfortunately, we are now working with just the private sector data as the US government shutdown is delaying all the government data like Jobless Claims and highly likely the NFP report. Depending on the length of the shutdown, even the US CPI could be in jeopardy.
The market might keep on drifting higher by inertia given the lack of catalysts or we could get stuck in a consolidation. 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, hawkish repricing in interest rates expectations caused by strong US data will likely keep on triggering corrections.
Gold Technical Analysis – Daily Timeframe
On the daily chart, we can see that gold extended the rally into yet another all-time high yesterday before pulling back a bit. 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 likely need strong US 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 3,717 level next.
Gold Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have yet another minor upward trendline on this timeframe. The buyers will likely lean on the trendline with a defined risk below it to keep pushing into new highs, while the sellers will look for a break lower to pile in for a pullback into the 3,790 support. The red lines define the average daily range for today.
Upcoming Catalysts
Tomorrow we conclude the week with the US NFP report (in case government funding is restored) and the US ISM Services PMI. Keep also an eye on Fed speakers.
