Last Friday, Gold rallied strongly on the back of the news of an imminent Iranian retaliation but eventually gave back all the gains as some Iranian officials indicated that it will be a “calibrated” response. Over the weekend, Iran launched its operation with drones and missiles against Israel but almost all of them were intercepted and there were no casualties. In the end, Iran said that the operation was deemed concluded and we got reports of general de-escalation with the US telling Israel that it won't support a retaliation.
We might see some positive risk sentiment in the European session which might put some pressure on Gold. In the big picture, Gold should remain supported as we head into the easing cycle, but in the short-term the hawkish repricing in rate cuts expectations is likely to weigh on Gold, especially if the rate hikes start to be put on the table at some point.
Gold Technical Analysis – Daily Timeframe
On the daily chart, we can see that Gold last Friday spiked above the 2400 level but eventually erased all the gains and ended the day lower. From a risk management perspective, the buyers will have a much better risk to reward setup around the trendline where they will also find the red 21 moving average for confluence. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets and target a bigger drop into the next trendline around the 2100 level.
Gold Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price has been diverging with the MACD, which is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, it could be a signal for a pullback into the trendline around the 2275 level where we can also find the 50% Fibonacci retracement level for confluence. We can see that the price bounced on a minor trendline last Friday as the buyers stepped in to position for a rally into a new all-time high. A break below the trendline should trigger a selloff into the major trendline as the sellers will likely pile in more aggressively.
Gold Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a minor resistance zone around the 2372 level where we can find the confluence of the 38.2% Fibonacci retracement level and the red 21 moving average. If the price gets there, we can expect the sellers to step in with a defined risk above the Fibonacci level to position for a break below the trendline with a better risk to reward ratio. The buyers, on the other hand, will want to see the price breaking higher to increase the bullish bets into a new all-time high.
Upcoming Events
This week is a bit empty on the data front with just two notable reports. Today we have the Retail Sales data while on Thursday we get the latest US Jobless Claims figures. Strong data is likely to weigh on Gold, while weak figures should give it a boost.
