Gold erases gains as hopes for an imminent US-Iran deal fade. What’s next?
FUNDAMENTAL OVERVIEW
Gold rallied strongly in the final part of last week on expectations of an imminent US-Iran deal. The catalyst that started the rally was an Axios report on Thursday saying that US and Iran had reached a 60-day memorandum of understanding (MoU) and the agreement required final approval from Trump. We got another impulse higher on Friday after Trump announced on Truth Social the lift of the US naval blockade and a "final determination" on a broader agreement to follow shortly in the White House Situation Room.
Gold started to give the gains back after the New York Times reported that Trump did not reach a decision on any new deal with Iran in the Situation Room as several important issues remained unresolved and continue to prevent a final settlement. After that, we got many other reports indicating that an agreement might not be as close as it seemed last week. Moreover, the US struck again Iranian military sites and the Iran responded with an attack on a US base in Kuwait. The ceasefire is still supposedly intact.
Despite the expectations for an imminent deal and the reopening of the Strait of Hormuz, we still haven’t got anything official. There’s just been lots of noise. The main risk for gold remains the Federal Reserve.
More and more policymakers are now pushing for dropping the easing bias, so we can expect that to happen at the upcoming FOMC meeting. Moreover, if nothing changes on the Strait of Hormuz side before then, we might get a hawkish surprise as inflation continues to run hot and the US data remains resilient.
In the short-term, a resolution and the reopening of the Strait will likely support gold on falling oil prices and increased rate cut bets. But if the Strait remains closed for longer and oil prices stay elevated, the risk of the Fed being forced to hike anyway increases, and that’s going to keep weighing on gold.
GOLD TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can see that gold bounced from the new two-month lows and erased all last week’s losses. The price is now trading again right in the middle of the two key trendlines, so there’s not much we can glean from this timeframe. 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 broke above the downward trendline and extended the rally into the key resistance zone around the 4,585 level before pulling back. The price is now retesting the broken trendline. We can expect the buyers to step in around these levels with a defined risk below the 4,460 level to target a break above the 4,585 resistance. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into new monthly lows.
GOLD TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, we can see more clearly the retest of the trendline with the swing low around the 4,488 level acting as support. Again, this is where we can expect the buyers to step in with a defined risk below the support to position for a rally into new highs. The sellers, on the other hand, will look for a break lower to increase the bearish bets into new lows. The red lines define the average daily range for today.
UPCOMING CATALYSTS
Today, we have US ISM Manufacturing PMI. Tomorrow, we get the US Job Openings data. On Wednesday, we have the US ADP report and the US ISM Services PMI. On Thursday, we get the latest US Jobless Claims figures. On Friday, we conclude the week with the US NFP report.
This article was written by Giuseppe Dellamotta at investinglive.com.提供 MainLink：Investinglive RSS Breaking News Feed
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