Gold gives back post-NFP gains as US-Iran focus persists

FUNDAMENTAL OVERVIEW

Gold saw a temporary jump on Friday after the NFP report came in softer than anticipated, but those gains soon evaporated. No bearish catalyst drove the retreat; the NFP data simply lacked significance in the broader context.

A single weak NFP reading does not alter the pattern of robust US economic data or the standoff with Iran. The only takeaway is a reduced likelihood of a Federal Reserve rate increase in October. However, those odds could still climb if next week's US CPI data delivers an upside surprise.

No major economic releases are scheduled this week, so attention is expected to stay on US-Iran developments. Gold price action may remain largely rangebound as a result.

Should US-Iran talks yield a breakthrough, oil prices would likely fall sharply, giving gold a boost on reduced rate hike expectations. An escalation, by contrast, would probably push crude oil higher and pressure the precious metal.

GOLD TECHNICAL ANALYSIS – DAILY TIMEFRAME

Gold (CFD contract) could not sustain its pullback all the way to the trendline, with the price reversing course earlier. The natural target for sellers should be the 3,885 level, where a major upward trendline also converges. If the price reaches that point, buyers are expected to step in with defined risk below the trendline, positioning for a rally to new record highs. Sellers, alternatively, will seek a break lower to increase bearish bets toward the 3,500 level.

GOLD TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME

Recent price action has been very choppy. Should another pullback reach the trendline, sellers are expected to lean on it with defined risk above it, continuing to push toward the 3,885 level. Buyers, on the other hand, will want to see the price break higher so they can pile in for a rally toward the 4,700 level next, with 4,400 as the first target.

GOLD TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME

Given the choppy price action, not much can be gleaned from this timeframe, though a minor resistance zone exists around the 4,165 level. If the price reaches that zone, sellers are expected to step in with defined risk above it, positioning for a drop into new lows. Buyers, on the other hand, will look for a break higher to target a pullback into the trendline.

UPCOMING CATALYSTS

Today brings the US ISM Services PMI. Wednesday features the FOMC meeting minutes. Thursday delivers the latest US Jobless Claims figures. Friday wraps up the week with the University of Michigan Consumer Sentiment survey.