Gold rebounded late last week after Trump ruled out strikes on Iran before the November elections, while Treasury yields and the US dollar pulled back. Traders now watch US-Iran developments and Wednesday's US CPI report as the next key catalyst.
Gold rebounded strongly in the final part of last week after Trump ruled out strikes on Iran before the November elections and added that they have been having productive discussions. The news triggered a relief rally as Treasury yields and the US dollar pulled back.
Iran talks remain unresolved
Over the weekend, Iran said the US's response to its proposal to reopen the Strait of Hormuz was insufficient. Tehran had outlined seven conditions for restoring normal maritime passage within seven days and said some points remained unresolved. Negotiations to resolve the difference are still ongoing.
US CPI is the next test
Looking ahead, the focus will be on US-Iran developments and the US CPI on Wednesday. A hotter than expected core reading could raise the probabilities for a Fed rate hike in October, putting downward pressure on gold. A soft report, however, will likely ease rate hike concerns further and provide another boost to the precious metal.
Gold trades near a downward trendline
On the daily chart, gold (CFD contract) is trading near a downward trendline, where sellers will likely step in to position for a drop into the 3,885 level. Buyers, on the other hand, will want to see the price break higher to pile in for a rally into the 4,700 level, with 4,500 as the first target.
On the 4 hour chart, a minor upward trendline defines the recent pullback. If the price falls back into it, buyers can be expected to lean on it and target the 4,400 level next.
Source: Investinglive
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