Fundamental
Overview
Gold had a positive day on
Friday as it found support from the risk-off sentiment caused by Trump’s threat
of substantially increasing tariffs on China. Over the weekend, we had more
soothing comments from Trump and other US officials which triggered a recovery
in risk sentiment.
Despite the positive risk
sentiment, gold started the week on a positive note and extended the gains into
a new all-time high this morning. The market has been mostly driven by inertia given
the lack of bearish catalysts.
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, a hawkish repricing
in interest rates expectations will likely trigger a correction, but for that
we will need strong US labour market data or a hot US CPI next week.
Gold
Technical Analysis – Daily Timeframe
Gold daily
On the daily chart, we can
see that gold had a positive day on Friday following Trump’s threat of a
substantial increase in tariffs on China. 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
Gold 4 hour
On the 4 hour chart, we can
see that the price bounced near the 3,939 level and extended the rally into a
new all-time high this morning. From a risk management perspective, the buyers
will have a better risk to reward setup around the trendline to position for
further upside, while the sellers will look for a break lower to target a deeper
pullback into the 3,819 level next.
Gold
Technical Analysis – 1 hour Timeframe
Gold 1 hour
On the 1 hour chart, we can
see that the price already reached the upper bound of the average daily range for today. This doesn’t mean
it cannot continue, but we can usually see some consolidation or a pullback at
such limits. In this case, if the price fall back below the previous all-time
high at 4,059, we can expect the sellers to pile in to position for a drop into
the trendline. The buyers, on the other hand, will likely continue to step in
around these levels with a defined risk below the 4,059 level to keep pushing
into new highs.
Upcoming
Catalysts
This week is going to be very light again in
terms of data releases given the US government shutdown. Data like Retail Sales
and Jobless Claims won’t be released. We will have lots of Fed speakers though
with Fed Chair Powell scheduled for tomorrow. Given the lack of key US data
though, it’s very unlikely to see a change in stance. For now, we know that
only the US CPI will be published despite the shutdown, which is scheduled for
Friday October 24.