Gold Technical Analysis – We got a new all-time high amid fears of a trade war

Fundamental
Overview

Gold yesterday extended the
rally into a new all-time high as Trump’s tariffs on Canada, Mexico and China led
to a notable fall in real yields. In fact, inflation expectations (as measured
by the breakeven rates) rose, while nominal Treasury yields fell.

The thinking here is that a
trade war would lead to an increase in inflation but also to a slowdown in the
economy. Thankfully, it seems like Trump continues to use tariffs as a way to
bring countries to the table and get some resolutions on his demands.

In fact, after some
positive talks the tariffs on Mexico and Canada have been paused for 30 days which
triggered some risk-on sentiment in the markets. Today, Trump is expected to
speak with Xi and positive news should strengthen the positive mood.

Given these expectations,
we might see a pullback in gold as Treasury yields will likely rise and inflation
expectations fall.

Gold
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that gold yesterday extended the rally into yet another all-time high as real
yields dropped into new lows. The buyers will likely continue to pile in as long
as the price stays above the 2790 level to target new highs, while the sellers
will look for a drop below that level to start looking for new lows with the
2721 level as the first target.

Gold Technical Analysis
– 4 hour Timeframe

On the 4 hour chart, we can
see that we have an upward trendline defining the bullish momentum. If
we get a pullback into the trendline, the buyers will likely lean on it to
position for a rally into a new all-time high, while the sellers will look for
a break lower to increase the bearish bets into the 2721 level next.

Gold Technical Analysis
– 1 hour Timeframe

On the 1 hour chart, we can
see that we have a counter-trendline defining the current pullback. If we get a
pullback into it, we can expect the sellers to lean on it to extend the
pullback into the major trendline. The buyers, on the other hand, will look for
a break higher to increase the bullish bets into new highs. The red lines
define the average daily range for today.

Upcoming
Catalysts

Today we get the US Job Openings data and
potentially a Trump-Xi call on tariffs. Tomorrow, we have the US ADP and the US
ISM Services PMI. On Thursday, we get the latest US Jobless Claims figures. On
Friday, we conclude the week with the US NFP report.

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