Fundamental
Overview
Last Thursday, we finally
got the breakout in gold after a softer than expected US PPI report. That was
kind of a strange move but eventually the momentum picked up and we got the rally
into new all-time highs.
Late Thursday we have also
got WSJ’s Timiraos publishing an article suggesting that a 50 bps cut was still
on the table and gold added to gains as real yields continued to fall. We are
now heading into the FOMC decision with the 50 bps probabilities standing
around 60%.
Before the FOMC we have a
couple of top-tier US data points like Retail Sales and Industrial Production. In
case we get strong data we could see a pullback in gold, but overall we will
likely head into the decision with a 50/50 chance anyway.
Gold
Technical Analysis – Daily Timeframe
Gold Daily
On the daily chart, we can
see that gold finally managed to break out of the month-long range and extended
the rally close to the 2600 level as momentum players piled in.
In case we get a pullback, we
can expect the buyers to step in around the previous resistance
now turned support to position for the continuation of the uptrend. The
sellers, on the other hand, don’t have any level where to lean on this
timeframe, so we need to zoom in to see some more details.
Gold Technical Analysis
– 4 hour Timeframe
Gold 4 hour
On the 4 hour chart, we can
see more clearly the breakout and then the increase in the bullish momentum as more
buyers started to pile in while sellers squared their positions. There’s not
much else to add here, so we need to zoom in some more to get a better picture.
Gold Technical Analysis
– 1 hour Timeframe
Gold 1 hour
On the 1 hour chart, we can
see that we have a minor upward trendline.
The buyers will likely keep on leaning on it to position for a rally into the
2600 level. The sellers, on the other hand, will want to see the price breaking
lower to position for a drop into the 2532 level. The red lines define the average daily range for today.
Upcoming
Catalysts
Tomorrow we get the US Retail Sales and the US Industrial Production data. On
Wednesday, we have the FOMC Rate Decision. On Thursday, we get the latest US
Jobless Claims figures.
