Gold edged higher
yesterday but couldn’t extend the gains above the recent highs as markets
continue to wait for concrete US-Iran developments and the US CPI data.
On the US-Iran
front, we got some positive headlines yesterday that led to an improvement in
risk sentiment as hopes for a deal strengthened again.
It was reported that
meetings between Trump, Vance and the Qatari PM were positive, and they
discussed ways to progress talks with Iran.
Trump said after
talks with the Qatari PM that Qatar would rather see a peaceful solution with
Iran, but the US is ready for strikes if necessary.
Moreover, it was
reported that the US has allowed a small uranium enrichment inside Iran, which Tehran
agreed to, and preliminary agreement on reducing uranium enrichment is likely.
On the US CPI
side, the data today could seal a rate hike for the December FOMC meeting, with
traders already pricing in an 84% probability.
If we get a hot
report, we could see a downward spike in gold, but I would expect the losses to
be faded. This is because rate hikes at this point should put even more
downward pressure on the stock market and long-term Treasury yields amid growth
concerns, barring an end to the Iran war. Soft data, on the other hand, should
trigger an immediate rally on a dovish repricing.
Keep in mind that
in the current context, if Trump decides to escalate the war, inflation
expectations would rise alongside weakening growth outlook, creating a
stagflationary environment. This should be bullish for gold. At the same time,
if we get a de-escalation, we could see a dovish repricing on easing inflation
concerns, which should also support gold in the short-term.
GOLD TECHNICAL
ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can
see that gold (CFD contract) is still consolidating
above the broken trendline. The buyers will likely continue to pile in around
these levels, with a defined risk below the trendline, to keep targeting new
highs. The sellers, on the other hand, will need to see the price breaking
below the major upward trendline to open the door for new lows.
GOLD
TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, we have
a minor support zone around the 4,040 level. If we get another pullback, we can
expect the buyers to step in around the support, with a defined risk below the
minor upward trendline, to keep targeting the 4,500 level. The sellers, on the
other hand, will look for a break below the upward trendline to extend the
pullback into the major trendline next.
GOLD
TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, we
have another minor upward trendline that could act as support. We can expect
the buyers to lean on the trendline, with a defined risk below it, to keep
targeting the 4,500 level. The sellers, on the other hand, look for a break
lower to extend the pullback into the 4,040 support next. The red lines define
the average daily range for today.
UPCOMING CATALYSTS
Today we have
the US CPI report. Tomorrow, we get the latest US Jobless Claims figures. On
Friday, we conclude the week with the US PPI data.
This article was written by Giuseppe Dellamotta at investinglive.com.
