Gold Technical Analysis

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.

See the video below

This article was written by FL Contributors at www.forexlive.com.