FUNDAMENTAL
OVERVIEW
Gold rallied strongly yesterday following several positive developments on
the US-Iran front. In fact, the bullish momentum got triggered by Trump pausing Project Freedom so that the US could work to finalise
a deal with Iran. The pause was of course interpreted as another step towards a
deal.
Later in the European session, we got an Axios report saying that US and Iran were getting close to a
one-page memo to end the war and that US officials were expecting Iran’s
response to several key points in the next 48 hours. Tonight, we got reports
that Iran was expected to deliver a response via Pakistani mediators today.
In the short-term, a resolution and the reopening of the Strait will likely
support gold on falling oil prices and increased rate cut bets as inflation
worries would ease.
After that though, the focus will quickly turn back to the Fed and the
economic data. With the end of the war, the increase in economic activity could
keep inflation higher for longer and eventually even require rate hikes to
bring it sustainably back to the 2% target that the Fed has been missing since
2021. And that will set the stage for the next big crash.
GOLD Gold – daily
TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can
see that gold recovered all the losses since last week on the latest US-Iran developments.
The price is still trading right in the middle of the two key trendlines, so
there’s not much we can glean from this timeframe. We need to zoom in to see
some more details.
GOLD Gold – 4 hour
TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, we can
see the price broke above the strong resistance zone around the 4,650 and
extended the gains as more buyers piled in on the breakout. The natural target
is the April high around the 4,891 level. The sellers will need the price to
fall back below the 4,650 level to regain control and position for a drop into
the 4,350 level next.
GOLD TECHNICAL ANALYSIS – 1
HOUR TIMEFRAME
Gold – 1 hour
On the 1 hour chart, we can
see the minor consolidation after the breakout formed an upward triangle with
the price currently breaking out. The buyers will likely increase the bullish
bets here into the 4,891 level next, while the sellers will be better off
waiting for the price breaking below the minor upward trendline to extend the
pullback into the 4,650 support. The red lines define the average daily range for today.
UPCOMING CATALYSTS
Today we get the latest US Jobless Claims figures and an Iran’s response
to US’s war-ending proposal is expected to come via Pakistani mediators. Tomorrow,
we conclude the week with the US NFP report and University of Michigan Consumer
Sentiment survey.