Gold thrives as stagflationary risks continue to increase

Fundamental
Overview

Gold has been on a steady
uptrend lately as traders have been finding shelter in the precious metal amid
stagflationary risks. In fact, we are seeing inflation expectations rising
while growth forecasts get revised lower.

Last Friday, we got some
more bad news as the final University of Michigan survey showed consumer
sentiment slumping even more than preliminary report and long-term inflation
expectations got revised higher.

The spike overnight came
after the WSJ report saying that Trump is weighing
broader and higher tariffs with hikes potentially going up to 20%.

In the bigger picture, as
long as the Fed doesn’t change its reaction function and doesn’t consider rate
hikes, the trend should remain to the upside as real yields will continue to
fall amid the stagflationary pricing.

Gold
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that gold rallied into yet another all-time high as traders continue to
flock into the precious metal. From a risk management perspective, the buyers
will have a better risk to reward setup around the major trendline to position for further upside. The
sellers, on the other hand, will want to see the price breaking below the
trendline to start targeting a deeper correction into the 2832 level.

Gold Technical Analysis
– 4 hour Timeframe

On the 4 hour chart, we can
see that we have a minor upward trendline defining the bullish momentum. If we
were to get a pullback into the trendline, we can expect the buyers to lean on
it with a defined risk below it to position for a rally into new highs. The
sellers, on the other hand, will want to see the price breaking lower to pile
in for a drop into the next major trendline.

Gold Technical Analysis
– 1 hour Timeframe

On the 1 hour chart, we can
see that we have yet another minor upward trendline. As the fundamentals
continue to favour the upside, the buyers will look for every dip-buying
opportunity to position for further upside. Right now, the price is struggling
to extend into new highs as we reached the upper bound of the average daily range for today.

If we get a pullback into
the trendline, we can expect the buyers to step in to position for new highs,
while the sellers will look for a break lower to extend the pullback into the
next trendline.

Upcoming
Catalysts

Tomorrow we get the US Job Openings and the
US ISM Manufacturing PMI. On Wednesday, we have the US ADP and the unveiling of
the US reciprocal tariffs plan. On Thursday, we get the US ISM Services PMI and
the latest US Jobless Claims figures. On Friday, we conclude the week with the
US NFP report and Fed Chair Powell speech

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