On Tuesday, August 4, during early European trading hours, spot gold continues to fluctuate narrowly near the 4,060 mark. Market participants are closely monitoring further developments in the Middle East, while today's focus will also be on the release of the U.S. JOLTs job openings data for June, which investors should watch carefully.

On Monday, August 3, spot gold initially spiked to around the 4,082 per ounce level in early trading, before retreating to near 4,020. It eventually settled at 4,055.34, recording a 0.22% decline. The current choppy price action is not coincidental. The recurring nature of the Middle East conflict has undermined the persistence of the safe-haven premium, while the roller-coaster swings in oil prices have caused inflation expectations to oscillate between "easing" and "re-emerging." This, combined with the high degree of uncertainty surrounding Federal Reserve policy, has further amplified market hesitancy.

Where to start

On the daily chart, the Relative Strength Index (RSI) is trending toward a neutral reading. Gold prices are trading below the 21-day Simple Moving Average (SMA) and are significantly lower than the 50-day and 100-day moving averages. This technical structure indicates that while the RSI has recovered to 46 and is approaching the neutral zone, the overall trend remains under pressure. The Average Directional Index (ADX) stands at 27, suggesting that the trend strength following the recent decline is weakening.

Why just 10 ASX 200 shares?

On the 4-hour chart, the Bollinger Bands are persistently contracting and flattening, with the upper and lower bands moving closer together, signaling a notable decline in volatility. The MACD is repeatedly converging around the zero line, with alternating red and green bars. The KDJ indicator has turned downward in the evening session, implying that short-term bearish forces are slightly gaining the upper hand. However, the RSI is still hovering around the 50 midline, maintaining a range-bound condition. Overall, the trading strategy for gold should be based on a broad range-bound approach.

Gold Trading Strategy:

Sell Order: Enter a short position at 4,074-4,076, with a stop loss at 4,093, targeting around 4,030.

Buy Order: Enter a long position at 4,020-4,018, with a stop loss at 3,999, targeting near 4,052.

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