Gold rallied sharply on Friday following news of imminent Iranian retaliation, but ultimately gave up all its gains as some Iranian officials indicated it would be a “calibrated” response. . Over the weekend, Iran launched its operation with drones and missiles against Israel, but almost all of them were intercepted and there were no casualties. Ultimately, Iran declared the operation considered complete and we received reports of a general de-escalation, with the United States telling Israel it would not support retaliation.
We could see some positive risk sentiment in the European session, which could put some pressure on gold. Overall, gold should remain supported as we head into the easing cycle, but in the near term, the hawkish reassessment of rate cut expectations is likely to weigh on gold, especially if hikes rates start to be put on the table at some point.
Gold Technical Analysis – Daily Timeline
Daily Gold
On the daily chart, we can see that gold climbed above the 2400 level last Friday, but eventually erased all gains and ended the day lower. From a risk management perspective, buyers will have much better risk to reward a setup around the trendline where they will also find the red 21 moving average for the confluence. Sellers, on the other hand, will want to see the price decline to increase bearish bets and target a deeper decline in the next trendline around the 2100 level.
Gold Technical Analysis – 4 Hour Time Frame
Gold 4 hours
On the 4-hour chart, we can see that price has diverged with the MACD, which is usually a sign of weakening momentum, often followed by pullbacks or reversals. In this case, this could be a signal for a pullback in the trendline around level 2275, where we can also find the 50% Fibonacci retracement level for the confluence. We can see that price bounced off a minor trendline last Friday as buyers positioned themselves for a rally to a new all-time high. A break below the trendline should trigger a sell-off in the main trendline as sellers will likely pile in more aggressively.
Gold Technical Analysis – 1 Hour Time Frame
Gold 1 hour
On the hourly chart we can see that we have a minor resistance area around level 2372 where we can find the confluence of the 38.2% Fibonacci retracement level and the red moving average 21. If price reaches there , we can expect sellers to step in with a set risk above the Fibonacci level to position themselves for a breakout below the trendline with a better risk/reward ratio. Buyers, on the other hand, will want to see the price move higher to increase bullish bets to a new all-time high.
Events to come
This week is a bit empty on the data front with only two notable reports. Today we have the retail sales data while on Thursday we will get the latest US jobless claims numbers. Strong data should weigh on gold, while weak numbers should give it a boost.
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