On Wednesday, March 12, during the Asian trading session, the spot price of gold was $5,172.84 per ounce, showing a volatile and consolidating pattern. The opening price was $5,176.18, with an intraday high of $5,182.21 and a low of $5,124.79.
Market drivers analysis: The gold market is experiencing a tense tug-of-war. On one side, escalating geopolitical tensions in the Middle East are fueling safe-haven demand. On the other, a strengthening US dollar and renewed inflation concerns are applying downward pressure. On Wednesday, spot gold closed at $5,176 per ounce, down 0.3% for the day, while the April US gold futures contract fell more sharply by 1.2% to $5,179.10. In early Asian trading on Thursday, spot gold was trading with minimal movement near $5,151 per ounce. Recently, gold's trading range has narrowed significantly, as if the market is holding its breath, caught between war and interest rate uncertainties.
Technical analysis: In the first half of the week, our strategy of buying on dips for upward momentum was validated. Gold prices performed as anticipated, gradually rebounding after stabilizing above $4,996, breaking through key resistance levels at $5,128 and $5,188, surpassing the double-top resistance at $5,206, and rallying to a high of $5,238.54. However, yesterday's pullback and consolidation temporarily disrupted the upward momentum, shifting the short-term trend into a corrective phase. Based on current price action and technical indicators, here is the analysis and trading strategy for the daytime session.
For the daytime session, it is advisable to first follow the current corrective move following the recent rally. Avoid rushing to buy the dip; instead, patiently wait for the market to provide a clear directional signal before adjusting the strategy. From a technical perspective, key support is seen at $5,101. This level represents a significant support zone from the recent rebound and is a crucial defensive line for any daytime pullback. If gold finds support near this level and stabilizes, a rebound is likely. The $5,195 level is viewed as a pivotal point between bullish and bearish momentum. This was a key entry level for previous long positions and represents a support zone following the double-top breakout. Whether gold can reclaim and hold above $5,195 during the day will be critical for determining the short-term trend.
Trading strategy: During the daytime, base your trades around the $5,195 pivot. As long as gold remains below this level, follow the corrective trend. The European trading session is a key time window for a potential directional breakout. If gold convincingly breaks above $5,195, promptly adjust the strategy to buy on strength, reverting to the primary bullish outlook. A breakout above this level could target the $5,206-$5,210 conversion zone, with further potential to test the previous high of $5,238 and the core resistance at $5,257.86.
If the price declines to test the $5,101 support, closely monitor its stability. If it holds with clear bullish reversal signals, consider a light long position, initially targeting a rebound to the $5,155-$5,160 range, and watch for a potential break above the $5,195 pivot. In an extreme scenario where gold breaks below $5,101, the correction could deepen, requiring attention to support at previous lows of $5,090.79 and $5,062.77. Reassess the trend and plan subsequent trades only after a clear stabilization signal emerges from these levels.
Overall, yesterday's decline appears to be a temporary correction within the broader uptrend and does not alter the medium-term bullish outlook. The key to short-term trading is to navigate the rhythm of a pullback followed by a potential rally. During the day, follow the correction, using $5,195 as the pivot and $5,101 as key support. Watch for breakout signals around the European session, ready to switch to a long bias. The primary strategy remains buying on dips near key support levels, while managing risk and staying flexible in response to price action at critical levels.