FundamentalOverview

Gold dropped yesterdayfollowing the weak USconsumer confidence report. The main culprit for the weakness in gold wasthe selloff in the US stock market as it tightens financial conditions when it’saggressive.

The problem here is that wegot weaker economic data with increasing inflation expectations. The marketmight be fearing that in case we get a slowdown, the Fed might not be fastenough in cutting rates amid inflation remaining above target and uncomfortablyhigh long-term inflation expectations.

This is the growth scarerisk that was highlighted for some downside in gold given the overstretchedlong positions. The next NFP and CPI reports will be key for the market. Hotdata, especially on the inflation side, will likely trigger a strong selloff ingold.

GoldTechnical Analysis – Daily Timeframe

On the daily chart, we cansee that gold pulled back from the all-time highs following the selloff in theUS stock market. From a risk management perspective, the buyers will have abetter risk to reward setup around the 2790 level, while the sellers will lookfor a break below the level to start targeting the 2600 level next.

Gold Technical Analysis– 4 hour Timeframe

On the 4 hour chart, we cansee that the price bounced around the major upward trendline as the buyers stepped in witha defined risk below the trendline to position for a rally into new all-timehighs. The sellers, on the other hand, will want to see the price breakinglower to increase the bearish bets into the 2790 level next.

Gold Technical Analysis– 1 hour Timeframe

On the 1 hour chart, we cansee that we have a resistance zone around the 2925 level. If the price getsthere, we can expect the sellers to step in with a defined risk above theresistance to target a break below the major trendline. The buyers, on the otherhand, will look for a break higher to increase the bullish bets into newall-time highs. The red lines define the average daily range for today

UpcomingCatalysts

Tomorrow we get the latest US Jobless Claims figures, while onFriday we conclude the week with the US PCE data.

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