FUNDAMENTAL OVERVIEW Gold has been stuck in a consolidation for almost a month now despite lower real yields, looser financial conditions and a weaker US dollar.
FUNDAMENTAL OVERVIEW Gold has been stuck in a consolidation for almost a month now despite lower real yields, looser financial conditions and a weaker US dollar. The main thing that’s been capping the bullish momentum has been the more hawkish Fed’s stance.
This is unlikely to change anytime soon as even if the US-Iran war officially ends and the Strait of Hormuz is reopened, the increase in economic activity might keep inflation higher for longer and force the Fed to hold rates steady. Nonetheless, the reopening of the Strait should give the market a boost in the short-term as it would ease some inflation worries and bring back rate cut expectations. After that though, traders will be focused on economic data and the Fed’s stance.
GOLD TECHNICAL ANALYSIS – DAILY TIMEFRAME On the daily chart, we can see that gold continues to consolidate amid the US-Iran stalemate. The natural target for the buyers remains the downward trendline around the 5,000 level. If the price gets there, we can expect the sellers to step in with a defined risk above the trendline to position for a drop into the major upward trendline around the 4,200 level.