Last week came to an end on a negative note for gold. First, the optimistic expectations surrounding the US-UK trade deal, and then the anticipation of the US-China talks over the weekend, both exerted downward pressure on this precious metal.
Looking at the broader picture, gold is still in an upward trend. This is because real yields are likely to keep dropping as the Federal Reserve continues to ease its monetary policy. However, in the short term, positive news from the trade sector or a more hawkish stance from the Fed could cause gold prices to decline further. This is because the market may reduce its concerns about stagflation.
When we look at the daily chart, we can clearly see that gold prices have been retreating due to the positive trade news. From the perspective of risk management, buyers will find a more favorable risk – to – reward opportunity near the major trendline. Meanwhile, sellers will be watching for the price to break lower. If it does, they may increase their bearish bets, aiming for the next level at 2957.
On the 4 – hour chart, the price of gold has fallen all the way back to a key support level around 3258. This is the point where we can expect buyers to enter the market. They will likely set a defined risk level below 3258, hoping to position themselves for a rally back to the 3367 resistance level. Sellers, on the other hand, will be looking for the price to break below 3258. If that happens, they may increase their bearish positions, with the next target being the major trendline.
The 1 – hour chart shows us that there is now a minor downward trendline that defines the current pullback in gold prices. If the price reaches this trendline, we can expect sellers to take action. They will set a defined risk above the trendline, aiming for further price drops. Buyers, conversely, will be looking for the price to break above this trendline. If it does, they may increase their bullish bets, hoping to drive the price to new highs. The red lines on the chart represent the average daily trading range for today.
Today, we will receive a briefing on the US-China trade talks. Tomorrow, the US Consumer Price Index (CPI) report will be released. On Thursday, we will get the latest figures for US Jobless Claims, as well as the US Producer Price Index (PPI) and US Retail Sales data. Finally, on Friday, the week will conclude with the University of Michigan Consumer Sentiment report.
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