Gold stays rangebound on US-Iran standoff, CPI risk

FUNDAMENTAL OVERVIEW

In the previous session, gold dipped below last week's low, but the losses were wiped out as oil prices and Treasury yields fell back.

US-Iran tensions and Fed rate expectations have been the primary factors for a while. The Middle East has calmed down since the UN General Assembly, but Iran's strikes on ships in the Strait of Hormuz continue as part of its blockade efforts.

On the policy side, Fed officials Williams and Jefferson pushed back on October rate hike expectations, and Friday's weaker-than-expected US jobs report cut the probability of a hike to 21%.

The dovish repricing boosted gold as real yields bounced, though ongoing US-Iran negotiations and the CPI reading next week may keep a lid on gains in the short term. A soft CPI could give gold another push via dovish repricing, but a hot one without Middle East progress could drive it to new lows.

With a thin economic calendar this week, attention is likely to remain on US-Iran headlines, keeping price action mostly rangebound.

An agreement in US-Iran talks would likely result in a significant drop in oil prices, benefiting gold through reduced rate hike expectations. A fresh escalation, however, would probably lift crude oil and drag on the metal.

GOLD TECHNICAL ANALYSIS – DAILY TIMEFRAME

Gold is consolidating near its lows. Another pullback to the trendline may be in store, where sellers could lean with risk above the line to aim for a decline to 3,885. Buyers, on the other hand, are looking for a breakout to position for a rally to 4,700, with 4,400 as the first target.

GOLD TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME

The price rebounded from last week's low on the 4-hour chart. A further dip to the 4,110 level may prompt buyers to re-enter, with risk below that low, to push toward the descending trendline. Sellers are watching for a break lower to add to bearish positions targeting 3,885.

GOLD TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME

On the hourly chart, a minor resistance zone appears around 4,165. If prices reach that area, sellers are likely to step in with risk above it to set up a drop to new lows. Buyers are seeking a move higher to target a pullback to the trendline.

UPCOMING CATALYSTS

Tomorrow brings the FOMC meeting minutes, followed by US Jobless Claims on Thursday and the University of Michigan Consumer Sentiment survey on Friday.