Gold extended the losses on the Friday as the US PMIs
came out better than expected and quelled growth concerns for the time being. Expectations
of potential US strikes on Iran over the weekend have also weighed on the
precious metal but eventually proved to be wrong.
The downside in the final part of last week seemed to be driven mainly by liquidations to cover losses in the stock market, much like what we’ve seen in 2025. Real yields, which are the ultimate driver of gold prices, actually fell so we could see a pullback in the short-term despite the fundamentals still weighing on the precious metals.
In the bigger picture, nothing has changed as the Middle
East crisis continues to put upward pressure on inflation while being a drag on
global growth. The focus this week will be on the FOMC decision on Wednesday
and the developments in the Middle East.
The Fed is widely
expected to keep interest rates unchanged, so a surprise rate hike would trigger
a strong selloff in gold. We won’t get the Dot Plot at this meeting, so the
attention will be mostly on Fed Chair Warsh. Given his reluctance to provide
forward guidance, I don’t expect him to say much, but traders will keep an eye
for any hawkish surprise.
GOLD TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can
see that gold (CFD contract) is approaching
the key support zone around the 3,885 level where we have also a major upward
trendline for confluence. If the price gets there, we can expect the buyers to
step in, with a defined risk below the trendline, to position for a rally into
new record highs. The sellers, on the other hand, will look for a break lower
to increase the bearish bets into the 3,500 level next.
GOLD TECHNICAL ANALYSIS – 4
HOUR TIMEFRAME
On the 4 hour chart, we can
see that the bearish momentum has waned. If we get a pullback into the 4,070
resistance, we can expect the sellers to step in there, with a defined risk
above the resistance, to keep targeting the 3,885 support. The buyers, on the
other hand, will want to see the price breaking higher to extend the pullback
into the downward trendline next.
GOLD TECHNICAL ANALYSIS – 1
HOUR TIMEFRAME
On the 1 hour chart, we
have a minor support zone around the 3,980 level where the price got rejected
from several times. The sellers will want to see the price breaking lower to increase
the bearish bets into the 3,885 level, while the buyers will likely step in
there again, with a defined risk below the support, to target a pullback into
the 4,070 resistance. The red lines define the average daily range for today.
UPCOMING CATALYSTS
Tomorrow we
get the US Consumer Confidence report. On Wednesday, we have the FOMC rate
decision. On Thursday, we get the US GDP report, the US PCE and the latest US
Jobless Claims figures. On Friday, we conclude the week with the US Employment
Cost Index.
This article was written by Giuseppe Dellamotta at investinglive.com.
