Basic overview
Gold has been stuck in a consolidation mode for about a month despite lower real yields, looser financial conditions and a weaker US dollar. The main thing limiting the upward momentum was the Fed’s more hawkish stance.
This is unlikely to change anytime soon, because even if the US-Iran war officially ends and the Strait of Hormuz reopens, the increase in economic activity could keep inflation high for longer and force the Fed to hold interest rates steady.
However, reopening the Straits would give the market a boost in the short term as it would ease some concerns about inflation and revive interest rate cut expectations. After that, traders will focus on the economic data and the Fed’s stance.
Technical analysis of gold – daily time frame
Gold – daily
On the daily chart, we can see that gold continues to strengthen amid the stalemate between the United States and Iran. The natural target for buyers remains the downtrend line around the 5000 level. If the price gets there, we can expect sellers to step in with specific risks above the trendline in order to prepare for a drop to the major uptrend line around the 4200 level. Buyers, on the other hand, will look for a breakout to extend the rally to the 5400 level next.
Technical analysis of gold – 4-hour time frame
Gold – 4 hours
On the 4-hour chart, we can see the price breaking above the simple downtrend line that was defining the pullback. The swing level at 4,772 may now act as resistance. Sellers are likely to enter there with a defined risk above the resistance level to continue pushing towards the 4,552 level. On the other hand, buyers will look for a break to increase bullish bets to the 5000 level next.
Technical analysis of gold – 1 hour time frame
Gold – 1 hour
On the 1-hour chart, we can see more clearly the recent price movement. Here we may get stuck between the support level of 4,670 and the resistance level of 4,772. Market participants will wait for a breakout on either side to choose a direction. Red lines define Average daily range For today.
Upcoming stimuli
tomorrow We get the US Consumer Confidence report. On Wednesday, we have the FOMC policy decision. On Thursday, we’ll get US Q1 GDP, the US Employment Costs Index and the latest US unemployment claims numbers. On Friday, we conclude the week with the release of the US ISM Manufacturing PMI.
