FundamentalOverview
Gold has been on a steady decline since hitting a new all-time high on the 17th of July. Wesaw a reversal in many other markets on that day and although the catalyst hasn’tbeen clear it seems like it’s all been connected to deleveraging fromstrengthening Yen.
Basically, the squeeze onthe carry trades impacted all the other markets. Given the magnitude of therecent appreciation in the Yen and the correlation with many other markets, itlooks like this could be the reason indeed.
On the macro side, the US datacontinues to point to a resilient economy with inflation falling slowly back totarget. The market is fully pricing a rate cut in September and December andsome chances of a back-to-back cut in November.
The risks for theeconomy increase the longer the Fed keeps policy restrictive though, so in the bigpicture it looks like gold has limited downside and lots of upside. On theother hand, we have Trump now looking more and more like a potential winner andhis policies are seen as inflationary which could see the Fed eventually goingeven more slowly on rate cuts.
This might notimpact the market substantially in the short term, but it could decrease thebuyers’ conviction for a strong rally.
GoldTechnical Analysis – Daily Timeframe
On the daily chart, we cansee that gold eventually extended the losses into the 2350 level after thefakeout around the 2430 resistance. We are now trading in the middleof the old range between the 2277 support and the 2430 resistance, so there’snot much we can glean from this timeframe and we need to zoom in to see somemore details.
Gold Technical Analysis– 4 hour Timeframe
On the 1 hour chart, we cansee more clearly the recent price action and the rejections from the trendline.This will be the key spot for the buyers and sellers as a break above thetrendline will likely increase the bullish momentum, while a stronger rejectionshould see the price dropping back to the 2350 support. The red lines definethe average daily range for today.
UpcomingCatalysts
Today we have the US Job Openings and the US Consumer Confidence reports.Tomorrow, we have the BoJ Policy Decision, the US Employment Cost Index and theFOMC Policy Decision. On Thursday, we get the latest US Jobless Claims figuresand the US ISM Manufacturing PMI. Finally, on Friday, we conclude the week withthe US NFP report.
