Gold Technical Analysis – Don’t expect the same uptrend from now on

Fundamental
Overview

Gold had a bad start of the
week after the nomination of Scott Bessent for Treasury secretary over the weekend.
Bessent is seen as a fiscal hawk, and the market views him as a great pick for
the job.

One of the main reasons why
the magnitude of the correlation between gold and real yields weakened in the
past couple of years was due to the US fiscal profligacy. This has led to much
stronger rallies in gold when real yields fell and more contained selloffs when
real yields rose.

In the bigger picture, gold
remains in a bullish trend as real yields will likely continue to fall amid the
Fed’s easing cycle, but the short-term corrections will be triggered by a
repricing in rate cuts expectations.

Overall, we might not see
the same strong uptrend in gold going forward as we got used to in the past
couple of years.

Gold
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that gold dropped all the way back to the key support
zone around the 2600 level where we have also the major trendline.
The price bounced there as the buyers stepped in to position for a rally into a
new all-time high. The sellers, on the other hand, will want to see the price
breaking lower to increase the bearish bets into the next major trendline around
the 2400 level.

Gold Technical Analysis
– 4 hour Timeframe

On the 4 hour chart, we can
see that the price is breaking above the minor resistance around the 2643
level. That should give the buyers more conviction to target new highs, so we
can expect the bullish momentum to gradually increase. The sellers, on the
other hand, will look for a failed break to pile in and target a break below
the 2600 support.

Gold Technical Analysis
– 1 hour Timeframe

On the 1 hour chart, we can
see that we have a minor upward trendline defining the current bullish momentum
on this timeframe. The buyers will likely keep on leaning on it, while the
sellers will look for a break below it to target new lows. The red lines define
the average daily range for today.

Upcoming
Catalysts

Today we get the US PCE report and the latest US Jobless Claims figures.

See the video below

This article was written by Giuseppe Dellamotta at www.forexlive.com.