Gold’s record rally stalls as traders turn their focus to the US inflation data | investingLive

Fundamental
Overview

Gold extended the gains in
the first part of the week after another soft NFP report on Friday. The increase in the dovish
bets on the Fed continued to drive real yields lower supporting higher prices
for gold.

This week, we get the US
inflation data with the US PPI today and the US CPI report tomorrow before the FOMC
meeting next week. A 25 bps cut is absolutely unavoidable now, but soft
inflation data could see the probabilities for a 50 bps cut to increase. In
that case, gold should get another boost.

In the bigger picture, gold
should remain in an uptrend as real yields will likely continue to fall amid
Fed easing given their dovish reaction function. In the short-term though, hawkish
repricing in interest rates expectations will likely keep on triggering corrections.

Gold
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that the momentum stalled a bit recently as depicted also by the shooting
star candle. From a risk management perspective, the buyers will have a better
risk to reward setup around the major trendline
at the 3,400 level, while the sellers will look for a break lower to extend the
drop into the 3,120 level next.

Gold Technical Analysis
– 4 hour Timeframe

On the 4 hour chart, we can
see that we have a minor upward trendline defining the bullish momentum. If we
get a pullback into the trendline, we can expect the buyers to lean on it with
a defined risk below it to keep pushing into new highs. The sellers, on the
other hand, will look for a break lower to increase the bearish bets into the major
trendline around the 3,400 level.

Gold Technical Analysis
– 1 hour Timeframe

On the 1 hour chart, we can
see that we have yet another minor upward trendline defining the bullish
momentum on this timeframe. Again, the buyers will continue to lean on it to
keep pushing into new highs, while the sellers will look for a break lower to
target the next trendline. The red lines define the average daily range for today.

Upcoming
Catalysts

Today we have the US PPI report. Tomorrow,
we get the US CPI report and the latest US Jobless Claims figures. On Friday,
we conclude the week with the University of Michigan Consumer Sentiment report.

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