Gold Technical Analysis – The most crowded trade

Fundamental Overview

As the stock markets around the world bottomed, the pressure on gold eventually waned and the precious metal rallied strongly into new all-time highs.

The rally has been aggressive as everyone rushed into gold as protection from potential stagflation due to trade wars. The problem is that “long gold” is now the most crowded trade according to the Bank of America Fund Manager Survey.

In the bigger picture, gold remains in an uptrend as real yields will likely continue to fall as the bar for rate hikes remains very high. The risks include another aggressive stock market selloff or a hawkish Fed.

In the short term, given the crowded long positions in gold, an easing in the trade war will likely trigger a deeper correction in the market, so watch out for developments on that front.

Gold Technical Analysis – Daily Timeframe

On the daily chart, we can see that Gold paused its run to the upside around the 3245 level. From a risk management perspective, the buyers will have a better risk to reward setup around the trendline to position for further upside. The sellers, on the other hand, will want to see the price breaking below the trendline and the 2957 level to extend the drop into the 2832 level next.

Gold Technical Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that the previous all-time high at 3168 could now act as support. That’s where the buyers will likely step in with a defined risk below the level to position for further upside. The sellers, on the other hand, will want to see the price breaking lower to pile in and target a pullback into the 3057 level next.

Gold Technical Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that we broke below the minor upward trendline that was defining the bullish momentum on this timeframe. That’s generally followed by some consolidation or a pullback. Again, the buyers will likely step in around the 3168 level to keep pushing into new highs, while the sellers will look for a break lower to target the 3057 level next. The red lines define the average daily range for today.

Upcoming Catalysts

This week we don’t have much on the agenda and it’s going to be shortened by the Good Friday holiday. Tomorrow, we have the US Retail Sales and Fed Chair Powell speaking. On Thursday, we get the latest US Jobless Claims figures. As a reminder, the market is focused on tariff negotiations at the moment, so the data is not as market-moving as it used to be in the past months.

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