On March 23, we noted last Friday that after Iran's oil facilities were attacked, a retaliatory response led to a sharp spike in oil prices, intensifying inflationary pressures. Coupled with the Federal Reserve's hawkish stance, this directly weighed on the price of gold. Short-term technical indicators also suggested a risk of further declines for gold. However, following a significant drop, signs of a corrective rebound emerged. Therefore, in terms of trading strategy, it was recommended to watch resistance levels at $4,720, followed by $4,800, with support levels at $4,600, then $4,500, and further down at $4,400.
Looking at subsequent price action, after the Asian session opened last Friday, gold extended its rebound from the previous day's stabilization, rising from $4,634 to encounter resistance at $4,735. After pulling back to $4,661 and finding support, it attempted another rebound during the European session, meeting resistance again near $4,734. Subsequently, gold fluctuated lower, stabilizing at $4,637. After the U.S. session began, gold broke downward, successively falling below the key psychological levels of $4,600 and $4,500, hitting a daily low of $4,477. At the opening this Monday, gold saw a slight rebound and is currently trading around $4,511. Overall, last Friday's pattern—a rebound in the Asian session followed by renewed declines in the European and U.S. sessions—largely aligned with our expectation of short-term corrective demand amid ongoing downside risks.
Analysis suggests that gold's sharp decline last Wednesday, followed by continued losses on Thursday and Friday, resulted in a drop of over $500 across three sessions, hitting a new low for over a month and indicating significant short-term weakness. This was primarily driven by the attack on Iranian oil facilities and subsequent retaliatory strikes on U.S.-linked oil and energy infrastructure, which escalated the conflict and worsened Middle East tensions. Brent crude prices climbed steadily, reclaiming a position above $100 per barrel and exacerbating global inflation concerns. This may compel the Fed to maintain higher interest rates for longer, bolstering the U.S. dollar and Treasury yields. Additionally, the Fed's hawkish rhetoric, including public statements that Middle East developments might limit rate cuts to just one this year, directly pressured gold prices. It is worth noting that after energy facilities became involved in the conflict, a former U.S. official indicated that Israel had been advised to avoid striking Iranian energy infrastructure, with Israel indicating compliance. This could lead to a short-term pullback in oil prices, potentially offering temporary support to gold.
On the daily chart, gold broke down decisively last Wednesday and fell for three consecutive sessions, losing over $500 and showing pronounced short-term weakness. Key resistance levels to watch include the lower Bollinger Band around $4,580, followed by last Friday's primary support-turned-resistance zone near $4,635—also aligned with the weekly Bollinger Band midline—and the 5-day moving average near $4,700. Support levels include Monday's early low around $4,450, followed by the February low near $4,400, and further down, the starting point of this year's major rally around $4,310, which is also the yearly low. The 5-day MA and MACD indicators show a bearish crossover, while the KDJ and RSI indicators also exhibit bearish crosses with slight upward hooks, suggesting continued downside risk technically. However, the sharp sell-off has created conditions for a potential technical rebound.
Intraday outlook for gold: Soaring oil prices are amplifying inflation worries, dampening expectations for Fed rate cuts, supporting the dollar and bond yields, and thereby pressuring gold. A range-trading approach is advised, with resistance eyed at $4,580 and $4,635, then $4,700. Support levels are at $4,450 and $4,400, followed by $4,310.