Gold remained stuck in consolidation around the highs as a mix of geopolitical and macroeconomic factors led to price action within a limited range. Last week, Israel finally decided to carry out limited retaliation against Iran. Iran has downplayed the airstrikes, which could be a sign that it does not want to escalate the situation further. We could finally put this episode behind our backs.
On the macro side, real yields have increased significantly over the past couple of weeks, which is generally a negative factor for the gold market. This was not the case this time and it is not yet clear whether this is simply because of geopolitical fears or something else. If it was indeed just because of geopolitical fears, we could start to see the price swing, so it will be crucial to monitor technical levels and upcoming data.
Gold Technical Analysis – Daily Timeline
Daily Gold
On the daily chart we can see that gold has remained stuck in a consolidation just below the 2400 level. From a risk management perspective, buyers will have a much better risk to reward setup around the line trend where they will also find the confluence of the 38.2% Fibonacci retracement level and the red 21 moving average. Sellers, on the other hand, will want to see the price decline to increase bearish bets and target a larger 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 led to pullbacks into the minor black trendline on which buyers continued to position for new higher highs. This morning we had a breakout, so the chances of a fall into the main trendline increased. Sellers will begin to accumulate with set risk above the most recent swing high to position themselves for a fall into the trendline. Buyers, on the other hand, will want to see the price rise above the minor trendline in order to position themselves for a rally to a new all-time high.
Gold Technical Analysis – 1 Hour Time Frame
Gold 1 hour
On the hourly chart we can see that we have a strong resistance zone around the 2400 level where the price was rejected several times last week, except for the spike caused by the Israeli retaliation. We can see that we now have a minor downtrend line where we can also find the confluence of the red 21 moving average and the 61.8% Fibonacci retracement level. If we get a pullback from current levels, we can expect sellers to leverage the trendline to position themselves for a decline into the major trendline with a better risk/reward setup . Buyers, on the other hand, will want to see the price rise to invalidate the bearish setup and position themselves for a rally to a new all-time high.
Events to come
This week is a bit empty on the data front with only a few notable releases. We start tomorrow with the US PMIs. On Thursday we will receive first quarter US GDP and the latest US jobless claims figures. On Friday, we conclude the week with the US PCE report. Strong data should weigh on gold, while weak numbers should give it a boost.
Watch the video below
cnbctv18-forexlive
