Gold prices struggled to gain traction on Monday, remaining under pressure in a choppy trading session, as the market grappled with a lack of clear directional cues. Analysts noted that while the cancellation of a military strike on Iran by former President Trump caused a sharp drop in oil prices, the rebound in gold was limited, continuing its trend of pressured consolidation.
The risk of rising real interest rates in the US continues to weigh heavily on gold prices. In terms of key levels, resistance was seen at $4,082 and then $4,120, while support was monitored at $4,046. A break below this level could open the door to $4,000 and $3,960.
During Monday's European session, gold tested the $4,046 support level multiple times and held steady. Just before the US market open, it rebounded to $4,064 before stalling and then retreating. After the US market opened, prices broke below the $4,046 short-term support, hitting a daily low of $4,019. This low was near the previous week's low of $4,020, where the metal found a footing. Gold then recovered, rising to $4,072 on Tuesday before encountering resistance, and is currently trading around $4,048.
Overall, gold's rebound appears weak, and the price continues to trade under pressure in a consolidation pattern. Wolfinance analysts suggest that President Trump's decision to cancel the strike on Iran led to a significant gap-down and sharp decline in oil prices on Monday. This supported a higher open for gold, but the upside was limited as the metal quickly retreated. The situation is further complicated by Iran's denial of the cancellation, calling it a "new lie," which introduces uncertainty into the Middle East situation. This uncertainty has made market participants cautious on both the long and short sides, preventing a sustained trend and keeping gold in a tug-of-war, range-bound pattern.
Where to focus next
Beyond the Middle East, the market's attention this week is on US employment data, including the ADP and Non-Farm Payrolls (NFP) reports. These figures will influence the market's assessment of the Federal Reserve's policy path. The risk of rising real interest rates remains a key headwind, putting significant pressure on gold prices.
On the daily chart, gold is consolidating under pressure around the $4,050 level. Key support is seen at Monday's low of $4,020, a level that has been tested and held over the last three sessions. Further down, the lower band of the daily Bollinger Bands provides support at $3,980. On the upside, resistance is at the intraday high of $4,072, followed by the psychological $4,100 level.
The daily Bollinger Bands have flattened and are now narrowing, which is limiting gold's trading range. The 5-day moving average shows a tentative bearish cross, the MACD indicator is slowing its bullish momentum, the KDJ indicator shows a minor bearish cross, while the RSI shows a minor bullish cross. This technical picture suggests gold is in a period of sideways consolidation and adjustment.
Gold reference for the day: Gold's downside is limited, but its upside is also weak, indicating that the short-term trend will remain range-bound. The recommended approach is to treat the market with a range-trading mindset. Support levels to watch are $4,020 and $3,980, while resistance levels to watch are $4,072 and $4,100.