Gold hits a new all-time high but the upcoming US data could trigger a pullback | investingLive

Fundamental
Overview

Gold managed to push into
yet another all-time high today. This bullish momentum has been building since
Friday. The market continues to run by inertia as we haven’t got any strong
negative catalyst.

Nonetheless, the Fed didn’t
match the very dovish rate path priced in by the market and that could mean
that strong US data could trigger a hawkish repricing in interest rates
expectations, especially considering the current divergence between the market
pricing and the Fed’s forecast.

This in turn could offer a
pullback which would be similar to what happened last year. In the bigger
picture though, 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, 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 gold managed to set yet another all-time high today. From a risk
management perspective, the buyers will have a better risk to reward setup around
the major trendline, while the sellers will look for a
break lower to extend the drop into the 3,120 level next. Such a big correction
might happen if we get strong US data that triggers a hawkish repricing in
interest rates expectations.

Gold Technical Analysis
– 4 hour Timeframe

On the 4 hour chart, we can
see that the price bounced from the minor upward trendline around the 3,630
level. The buyers will likely continue to lean on the trendline to keep pushing
into new highs, while the sellers will look for a break lower to pile in for a
drop into the major trendline.

Gold Technical Analysis
– 1 hour Timeframe

On the 1 hour chart, we can
see that we have the top trendline around the 3,723 level that could act as
resistance. The sellers will likely step in around these levels with a defined
risk above the trendline to position for a pullback into the minor upward trendline.
The buyers, on the other hand, will want to see the price breaking higher to
increase the bullish bets into new highs, although it might not happen today
given that the price is already trading near the top of the average daily range for today.

Upcoming
Catalysts

Tomorrow we have the US Flash PMIs and Fed
Chair Powell speaking. On Thursday, we get the latest US Jobless Claims figures.
On Friday, we conclude the week with the US PCE report.