FUNDAMENTAL
OVERVIEW

Gold fell briefly below the 4,000 level in the Asian session but quickly
recouped the losses. Nothing has changed on the fundamental side as precious
metals remain under pressure due to the Fed tightening risk.

There’s a 31% chance of a
hike in July and 64% probability of a move in September, with a total of 33 bps
of tightening priced in by year-end. There’s been a slightly dovish repricing
in the last few days.

One of the reasons could be
the huge selloff in oil prices which have now reached pre-war levels. The other
reason is that the hawkish repricing reached a near-term peak and for more we
will likely need upside surprises in the NFP and CPI reports.

All in all, there isn’t a strong reason to price in any more rate hikes at
the moment. Therefore, we either see more pullbacks in the next days, or the
price action remains rangebound until we get the US data. Chasing lower prices right
now without a meaningful fresh catalyst looks bad from a risk to reward
perspective.

In terms of economic data, given the Fed’s focus on inflation, the US CPI
will likely be more important for market pricing unless we get a blockbuster
NFP report. In line or worse than expected data, should lead to a pullback
pretty much across the board, with gold benefiting from some dovish repricing.

GOLD TECHNICAL
ANALYSIS – DAILY TIMEFRAME

On the daily chart, we can
see that gold dropped below the 4,000 level again in the Asian session but quickly
recouped all the losses. The natural target remains the 3,885 level but the
bearish momentum is clearly fading as the hawkish repricing peaked last week. If
the price falls into the 3,885 level, we can expect the buyers to step in with
a defined risk below the level to position for a rally into the major downward
trendline. The sellers, on the other hand, will want to see the price breaking
lower to increase the bearish bets into the major upward trendline around the
3,700 level.

GOLD TECHNICAL ANALYSIS – 4
HOUR TIMEFRAME

On the 4 hour chart, we can
see the price broke below the minor counter-trendline and it’s now retesting
it. The sellers are likely stepping in around the broken trendline with a
defined risk above it to keep pushing into new lows. The buyers, on the other
hand, will want to see the price breaking higher to pile in for a rally into
the major downward trendline.

GOLD TECHNICAL ANALYSIS – 1
HOUR TIMEFRAME

On the 1 hour chart, there’s
not much we can add here but if we get a break above the trendline, we can
expect the pullback to extend into the swing high around the 4,096 level. That’s
where the sellers will have a better risk to reward setup to target new lows,
while the buyers will need a break to open the door for new highs. The red
lines define the average daily range for today.

UPCOMING CATALYSTS

Today, we get the US Job
Openings data and the US Consumer Confidence report. Tomorrow, we have the US
ADP report, the US ISM Manufacturing PMI and Fed Chair Warsh speaking. On
Thursday, we conclude with the US NFP report, and the US Jobless Claims
figures.