Gold Technical Analysis

Key Takeaways:

• Bullish candle patterns on the 1-hour and 4-hour charts align with a supportive macro backdrop, including ongoing central bank buying and geopolitical uncertainty.
• Gold has retraced from its recent highs, potentially shaking out weaker holders and resetting technical indicators.
• US stock profit margins are running roughly twice their historical average, a dynamic that may be pushing cautious investors back toward gold.

Gold's bullish technicals do not appear to be just chart patterns. The bullish candles seen in the 1-hour and 4-hour charts seem to line up with the fundamental picture. Central bank demand is still high and geopolitics is still a concern. The geopolitical edge is not just the Iran conflict but may also reflect a hedge against USD weakness. A bullish candle on its own can be noise, but in this macro backdrop it can carry more weight.

When technical momentum turns positive while central banks are still buying, signals like this deserve attention.

Gold has had a chance to retrace and cool down from its massive rally that saw new buyers lining up in the thousands to get their share. The weak hands may have been shaken out. It appears that many indicators are back in the green and the macro picture has not really changed. Central banks have still been buying (most notably, China's) and investors may be less frenzied but are still looking for protection.

US stocks have shaken off initial fears by rocketing to new heights. Here is the issue though: profit margins are now roughly twice their historical average. Investors looking to hold or enter are now looking even closer at the potential of the rubber band snapping back. According to a trending headline published on MarketWatch, the S&P's profits are a double-edged return, covering fears of investors having their profits hit for just that reason. This factor does not guarantee that profit margins need to retreat immediately to their mean, however it may reveal where the continued caution is coming from and why gold is seeing green after its large retracement.

This article is general information only and does not constitute financial advice. Past performance is not indicative of future results. Always conduct your own research or consult a licensed financial adviser before making investment decisions