Gold prices saw a notable recovery during today's trading session, after hitting their lowest level in over a month, surpassing $4,650 during the European session. Despite this rise, cautious sentiment still prevails in the markets due to the absence of strong fundamental catalysts to support continued gains.
Concerns about inflation remain a key driver of markets, fueling expectations that central banks, particularly the US Federal Reserve, will adopt tighter monetary policies. This trend supports higher US Treasury yields and strengthens the dollar, putting pressure on gold as a non-yielding asset.
Conversely, escalating geopolitical tensions between the United States and Iran are contributing to increased market uncertainty, particularly with the unfolding events in the Arabian Gulf region. These tensions have been reflected in rising oil prices, exacerbating global inflation concerns.
Market data indicates that the probability of a US interest rate hike by the end of the year has risen to around 35%, compared to less than 10% previously, which strengthens the dollar and limits gold's gains.
Technical analysis:
Technically, gold remains in a short-term downtrend, facing strong resistance near the $4,655 level (the 200-period moving average). Momentum indicators also point to weak buying pressure, with the Relative Strength Index (RSI) remaining below 50.
Gold is expected to face further resistance at $4,655 and $4,711, while support is seen at $4,501 and then $4,407. If selling pressure continues, losses could extend to lower levels.
a summary:
Despite the current recovery, gold's prospects remain limited given the strength of the dollar and increasing expectations of interest rate hikes, making any potential gains vulnerable to subsequent selling unless new catalysts emerge to support the upward trend.