On March 20, it was noted that Thursday's trading saw significant downward pressure on gold prices. This was primarily attributed to a sharp rise in oil prices following an attack on Iranian oil facilities on Wednesday, which caused oil to reverse from losses to gains. Higher oil prices are expected to intensify inflationary pressures, potentially forcing the Federal Reserve to maintain elevated interest rates for a longer period, thereby weighing on gold. Short-term technical indicators also suggested a continued risk of decline for gold. Traders were advised to monitor the key level of $4,800. A break below this level could open further downside toward $4,700, while a stabilization might lead to a rebound toward $4,860 and $4,900.

Looking at the subsequent price action, gold opened lower during the Asian session on Thursday but found support at $4,804 before rebounding to encounter resistance at $4,866. After the European market opened, gold broke below the key $4,800 level and continued to decline, hitting a daily low of $4,502 during the U.S. session—a drop of over $300. The price later stabilized and recovered somewhat, closing at $4,650, recouping nearly half of the day’s losses. Overall, gold remained under pressure, extending its prior downtrend, though the magnitude of the decline slightly exceeded expectations.

Analysis suggests that gold’s sharp drop on Thursday, following a significant retreat on Wednesday, pushed the metal to a fresh one-month low. The decline was driven by volatile energy prices and a hawkish stance from central banks. Specifically, escalating tensions between the U.S. and Iran led to a surge in oil prices after Iranian oil facilities were attacked. In response, Iran launched large-scale strikes on U.S.-related oil and energy infrastructure, causing Brent crude to rally further. Rising oil prices amplify inflation risks, which may compel the Fed to keep interest rates higher for longer. During its latest meeting, the Fed held rates steady and indicated that, due to uncertainties in the Middle East, it may only deliver one rate cut this year. The Fed Chair emphasized the need for more progress on inflation before considering rate reductions and raised this year’s inflation forecast to 2.6%, directly pressuring gold prices. However, after Thursday’s steep decline, gold rebounded nearly $150 as Brent crude retreated, erasing earlier gains.

On the daily chart, gold attempted to stabilize early in the week but broke lower on Wednesday, signaling continued weakness. Key support levels are seen at $4,600, near the middle Bollinger Band on the weekly chart, followed by $4,500—Thursday’s low—and further down near the February low around $4,400. On the upside, resistance is expected near $4,720, around the lower Bollinger Band on the daily chart, and then at $4,800, where the breakdown triggered Thursday’s selloff. Technical indicators show the 5-day moving average and MACD in a bearish crossover, while the KDJ is attempting to turn up and the RSI’s decline has slowed. Although short-term technicals point to further downside risk, the sharp drop has also created conditions for a corrective rebound.

In summary, rising oil prices following geopolitical tensions and the Fed’s hawkish policy stance continue to weigh on gold. Trading strategy should adopt a range-bound approach, with resistance eyed at $4,720 and $4,800, and support at $4,600 and $4,500. A further breakdown could target $4,400.