On Wednesday, March 19th, market analysis suggested that despite a short-term pullback in oil prices, which subsequently dragged down the US dollar and Treasury yields, thereby providing temporary support for gold, oil prices remained significantly higher than pre-conflict levels. This dynamic continued to suppress any meaningful rebound in gold, leaving it oscillating around the key $5,000 mark. Consequently, the trading strategy advised was to monitor resistance levels at $5,040 and then $5,100, with support levels seen at $4,970 and $4,930.
Subsequent market movements saw gold prices stabilize after opening in the Asian session, finding a base at $4,981 before encountering resistance at $5,016, thus continuing to trade around $5,000. However, approaching the US trading session, gold breached the crucial support near $4,970, extending its decline to $4,834. During the US session, a brief rebound to $4,899 met resistance, leading to a further drop to a new low of $4,807. This represented a single-day decline of nearly $200, indicating significant short-term weakness. In summary, while gold traded within expectations around $5,000 during the Asian and European sessions, a sudden market development—a sharp spike in oil prices—exerted renewed downward pressure on the precious metal.
Analysis from a Wolfinance star analyst indicated that earlier concerns over crude oil prices had eased at the start of the week, leading to a price retracement. This alleviated some of the selling pressure on gold, allowing it to stabilize and consolidate around $5,000. The situation changed dramatically on Wednesday when Iranian petroleum facilities were reportedly attacked. Following the incident, Iran issued urgent warnings, designating oil infrastructure in Saudi Arabia, the UAE, and Qatar as legitimate targets. This geopolitical escalation triggered a sharp rally in oil prices, reversing the day's earlier losses. The surge in oil prices stoked fears of heightened inflationary pressures, which could compel the Federal Reserve to maintain a higher interest rate policy for a more extended period. This expectation bolstered the US dollar and Treasury yields significantly for the day, resulting in a sharp sell-off for gold, which plunged to a one-month low. Looking ahead, a further escalation of tensions in the Middle East, supporting continued oil price gains, could potentially lead to additional pressure on gold prices.
On the daily chart, gold's attempt to stabilize at the week's start, consolidating around $5,000, was decisively broken on Wednesday with a sharp decline. Key support is now observed at the psychological $4,800 level, where prices found a temporary base during the sell-off. A breach below this level could open the door for a move toward $4,700. Resistance is seen near the lower Bollinger Band around $4,860, followed by the $4,900 level, where the US session rebound stalled. The previous major support level at $4,970 now acts as resistance. Technical indicators, including a bearish crossover in the 5-day moving average and MACD, along with downward-trending KD J and RSI, suggest a continued risk of further declines for gold.
Intraday gold outlook: The attack on Iranian facilities catalyzed a sharp rise in oil prices, reversing their daily trend. Higher oil prices are expected to exacerbate inflationary pressures, potentially leading the Fed to sustain higher interest rates longer. This supported a strong rally in the US dollar and Treasury yields, once again pressuring gold prices. The recommended trading approach is to treat the market with a range-bound mentality. Support is eyed at $4,800; a break below could target $4,700. If short-term stabilization occurs, potential rebound targets are $4,860, $4,900, and the former support-turned-resistance at $4,970.