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Fundamental
Overview
Gold is now down almost 6%
from the US election day. That shouldn’t be surprising as the last time we got
a red sweep gold dropped by more than 16%.
The reason is that a red sweep brings a more expansionary fiscal policy and should be not only positive
for growth but also for inflation.
In fact, the market now
sees just two 25 bps rate cuts in 2025 which is already much less than the four
projected by the Fed in September.
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 for now the short-term trend is to the downside due to
the repricing in rate cuts expectations.
Gold
Technical Analysis – Daily Timeframe
Gold Daily
On the daily chart, we can
see that gold is now trading near the key trendline around the 2600 level. This is
where the buyers are stepping in with a defined risk below the trendline 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 trendline around the 2400 level.
Gold Technical Analysis
– 4 hour Timeframe
Gold 4 hour
On the 4 hour chart, we can
see more clearly the strong support
zone we have around the 2600 level where there’s the confluence
of the previous swing low level and the trendline. We can see that we also have
a downward trendline defining the current bearish momentum.
If we get a pullback, the
sellers will likely lean on it to position for the break below the major
trendline, while the buyers will look for a break higher to increase the
bullish bets into a new all-time high.
Gold Technical Analysis
– 1 hour Timeframe
Gold 1 hour
On the 1 hour chart, we can
see that we have another minor downward trendline defining the bearish momentum
on this timeframe. More aggressive sellers might lean on this one to position
for the break of the major trendline, while the buyers will look for a break
higher to target the pullback into the next downward trendline. The red lines
define the average daily range for today.
Upcoming
Catalysts
Today, we have the US CPI report. Tomorrow, we get the latest US Jobless
Claims figures. On Friday, we conclude the week with the US Retail Sales data.