Gold extends the losses amid US-Iran stalemate, hawkish central banks. What’s next?
FUNDAMENTAL OVERVIEW
Gold has extended the losses yesterday after a technical breakout of the recent consolidation. The main thing that’s been weighing on precious metals has been the hawkish central banks amid the renewed inflation risk.
That looks unlikely to change anytime soon as Trump has rejected Iran’s proposal to first open the Strait of Hormuz and then hold nuclear talks. Unfortunately, with US stock prices at all-time highs Trump might not feel any pressure to concede.
This might even set the stage for the next big selloff if the Strait of Hormuz remains closed for much longer and oil prices stay elevated, thus forcing the Fed to hike interest rates in the coming months.
Today, we have the FOMC policy decision and although the Fed is expected to keep everything unchanged amid the US-Iran uncertainty, there’s a risk of a more hawkish leaning due to resilient US data and a longer than expected US-Iran war. A neutral Fed shouldn’t bring much volatility, but a more hawkish one could add more pressure on gold.
GOLD TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can see that gold extended the losses as the US-Iran stalemate pushed oil prices back into triple digit levels. We are trading right in the middle of the two key trendlines, so there’s no clear level where to lean on here. We need to zoom in to see some more details.
GOLD TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, we can see the price reached the first key swing level at 4,552 and started to consolidate. We have a minor downward trendline defining the current bearish momentum. If we get a pullback into the trendline, we can expect the sellers to lean on it with a defined risk above it to keep pushing into new lows. The buyers, on the other hand, will look for a break to pile in for a rally into the 5,000 level next.
GOLD TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, there’s not much we can add here as from a risk management perspective, the sellers will have a better risk to reward setup around the trendline. Nonetheless, we can expect the buyers to continue to step in around the 4,552 level to keep targeting the trendline, while a break lower will likely trigger a selloff into the 4350 level next. The red lines define the average daily range for today.
UPCOMING CATALYSTS
Today we have the FOMC policy decision. Tomorrow, we get the US Q1 GDP, the US Employment Cost Index and the latest US Jobless Claims figures. On Friday, we conclude the week with the US ISM Manufacturing PMI.
This article was written by Giuseppe Dellamotta at investinglive.com.提供 MainLink：Investinglive RSS Breaking News Feed
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