Gold's momentum stalls amidst awaited US rate cuts and geopolitical uncertainty

The recent surge in gold prices has encountered a temporary halt in momentum, attributed to a lack of significant fundamental news or market activity. Anticipation of upcoming US rate cuts, expected around June, coupled with lingering geopolitical tensions, has contributed to an uncertain market environment. However, for gold to break out from current levels, there is a need for a catalyst, whether fundamental or technical, to overcome the prevailing inertia.

Analysis of the daily gold chart reveals the formation of a bullish technical pattern, suggesting a potential imminent breakout. The pattern, known as a Bullish Pennant, represents a short-term consolidation phase characterized by the convergence of support and resistance lines. Typically, a breakout occurs as these two lines approach each other. If this pattern materializes as expected, it could lead to a significant upward movement in the price of gold.

In terms of retail trader sentiment, data indicates that 43.48% of traders are currently net-long, with a short-to-long ratio of 1.30 to 1. Compared to previous periods, there has been a slight increase in the number of traders net-long, while the number of traders net-short has decreased. These trends reflect evolving market sentiment and could influence future price movements in gold.