On Friday, March 20, during early Asian trading, spot gold experienced a rebound, currently trading near $4,720 per ounce. On Thursday, March 19, spot gold prices plummeted by 3.5%, closing at $4,650 per ounce, after briefly plunging over 6% intraday to a low of $4,502—the lowest level since early February. U.S. gold futures for April fell sharply by 5.9%, settling at $4,605. This marks the seventh consecutive day of decline for gold. Once heavily favored by institutional investors for its safe-haven and inflation-hedging qualities, gold now appears constrained by high interest rates, with the steep downturn causing significant concern among bullish investors.
Fundamental factors: Escalating conflict in the Middle East saw Israel launch precise strikes on Iran's South Pars gas field, prompting retaliatory attacks by Iran on energy facilities across the region—including the world's largest natural gas plant in Qatar and refineries in Saudi Arabia and Kuwait. Brent crude prices briefly approached $120 per barrel before paring gains, yet remained above the $100 threshold, closing at $104 per barrel on Thursday. This rapid supply shock has directly increased global energy costs, fueling inflation expectations like wildfire.
Central banks worldwide have adopted a firm stance. The European Central Bank kept interest rates unchanged but explicitly warned that soaring oil prices could overshadow growth and inflation prospects in the eurozone. The Bank of Japan, while leaning toward tightening, also held steady. The Bank of England unanimously voted to maintain borrowing costs, with some policymakers hinting at potential future rate hikes. The Federal Reserve, holding rates in the 3.50%-3.75% range on Wednesday, projected higher inflation and stable unemployment for the year, with only a symbolic single rate cut anticipated. The rationale behind investors' large-scale gold purchases—driven by currency depreciation concerns—is now rapidly diminishing.
Gold's decline is not isolated. Spot silver fell 3.3% to $72.82 per ounce after dropping over 12% intraday to $65.45. Platinum declined 2.7% to $1,966, while palladium slipped 2% to $1,446. Although geopolitical tensions typically boost safe-haven demand, rising energy costs are exerting downward pressure by increasing real yields and limiting upside potential for precious metals.
From a technical perspective, the daily chart for gold initially suggested a layered decline—first to around $4,700, then toward the $4,500-$4,400 range. However, the sharp overnight drop has released excessive short-term momentum. While this demonstrates the resolve of bearish adjustments, the rapid pace complicates short-term trend predictions. Intraday, gold may see a corrective rebound due to oversold conditions, with resistance observed near the 5-day moving average around $4,830. A rebound to this level could introduce uncertainty into the trend. For now, focus remains on the $4,700-$4,730 resistance zone, with key support at $4,500 and further downside potential toward the previous low near $4,400.
On the hourly chart, gold opened higher in early trading with notable rebound strength. Initial resistance is near $4,730; a failure to extend yesterday's decline may lead to a secondary pullback. If upward momentum strengthens further, watch for a new entry point near the 5-day average around $4,830. Real-time entry levels should be guided by live market analysis.
Trading recommendation for today: Consider light short positions if gold rebounds to test resistance between $4,730 and $4,740, with a stop-loss set above $4,750. Initial targets are $4,700-$4,690 for partial position reduction and stop-loss adjustment to breakeven, with remaining positions targeting $4,620-$4,600.