Gold extends the pullback after the mixed NFP, but the focus remains on the CPI report
FUNDAMENTAL
OVERVIEW
Gold extended the pullback
in the final part of last week following the US NFP report. The data wasn’t
bad, but it was enough to trigger a slightly dovish repricing in interest rate
expectations. The chances for a July hike are now standing at just 24%, while
the probabilities for a move in September dropped to 55%.
As mentioned previously, given
the Fed’s focus on inflation, the US CPI will likely be more important. For
now, Gold will likely remain rangebound at a higher level until we get to the main
event.
This week, we don’t have much on the agenda. We have Fed’s Waller speaking
today, but unless he explicitly endorses rate hikes, the price action should remain
rangebound. The other potential catalyst could be the FOMC meeting minutes on
Wednesday.
This is almost never a market moving report, but given the limited forward
guidance from Fed Chair Warsh, traders will want to see if there’s any further
signal in the minutes on the next policy move.
GOLD TECHNICAL
ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can
see that gold extended the pullback in the final part of last week following
the mixed US NFP report. We are now approaching the first major downward
trendline. We can expect the sellers to lean on the trendline with a defined
risk above it to position for a drop into new lows. The buyers, on the other
hand, will want to see the price breaking higher to increase the bullish bets
into the next trendline around the 4,500 level.
GOLD TECHNICAL ANALYSIS – 4
HOUR TIMEFRAME
On the 4 hour chart, we can
see that the break above the swing high around the 4,095 level triggered by the
NFP report opened the door for a move into the major downward trendline. If the
price pulls back to retest the 4,095 level, we can expect the buyers to step in
there with a defined risk below the support to keep pushing into new highs. The
sellers, on the other hand, will want to see the price falling back below the
4,095 level to pile back in and target new lows.
GOLD TECHNICAL ANALYSIS – 1
HOUR TIMEFRAME
On the 1 hour chart, we
have a minor support around the 4,142 level. The buyers will likely step in
around these levels with a defined risk below the support to keep pushing into new
highs. The sellers, on the other hand, will wait for a break lower to extend
the pullback into the 4,095 support next. The red lines define the average daily range for today.
UPCOMING CATALYSTS
Today, we get the US ISM
Services PMI. On Wednesday, we have the FOMC meeting minutes. On Thursday, we
get the latest US Jobless Claims figures.
This article was written by Giuseppe Dellamotta at investinglive.com.