On Thursday, September 10, international gold prices retreated and closed lower after encountering resistance, as geopolitical tensions in the Middle East escalated following the Yemeni Houthi group's seizure of key Red Sea coastal cities.
This development pushed both Brent and WTI crude oil prices above the $100 per barrel mark, heightening inflation expectations. Adding to the bearish sentiment, the stronger-than-expected US Producer Price Index (PPI) data further reinforced the probability of a Federal Reserve rate hike in September, which pressured gold prices.
The precious metal erased Wednesday's gains and broke below the 100-day moving average support, signaling increased bearish momentum. The short-term outlook suggests further downside potential, with prices likely to test the 60-day moving average support near the $4,240 level or possibly lower levels.
Looking at the specific price action, gold opened the Asian session at $4,403.87 per ounce and initially strengthened, reaching the day's high of $4,434.38 in late Asian trading. However, it then encountered resistance and steadily declined, touching $4,324 during early US trading hours before a brief rebound to $4,376. Unable to sustain this recovery, prices resumed their downward trajectory and eventually hit the day's low of $4,313.65 in late US trading, ultimately settling at $4,316.60. The daily trading range amounted to $120.73, with a decline of $87.27, representing a 1.98% loss.
Looking ahead to Friday, September 11, international gold opened with narrow fluctuations but continues to face significant resistance from multiple moving averages above. The fundamental backdrop remains predominantly bearish, as ongoing Middle East tensions and crude oil breaking through the $100 threshold amplify inflation worries. Additionally, the elevated US PPI data has boosted expectations for Fed rate hikes, which will likely constrain any upside attempts in gold prices and maintain the corrective pressure in the near term.
Today's session brings another batch of critical data, including the US August CPI figures, the preliminary September one-year inflation expectations, and the initial University of Michigan Consumer Sentiment Index for September. Based on yesterday's data and prevailing market expectations, these releases are likely to exert additional downward pressure on gold. Even if the figures come in below expectations, the market is expected to remain range-bound, as the current pressure is unlikely to reverse in the short term. Any rebounds should still be viewed as selling opportunities.
On the weekly chart, gold prices have declined again this week and are once more testing the 60-week moving average support. While there is potential for a bounce from this level, the current downside pressure remains considerable. Any rebound is expected to provide selling opportunities targeting a breakdown below this support, with the next watch point being the upward trendline support, which could eventually offer a buying opportunity for a bullish reversal.
On the daily chart, gold has been oscillating within the lower channel of the Bollinger Bands and has now broken downward. The Bollinger Bands are expanding to the downside, indicating strengthening bearish momentum. Resistance levels to watch on the upside include the 100-day moving average and the 5-10 day moving averages, while the primary downside target remains the 60-day moving average support.
For gold, key support levels are identified at $4,285 and $4,240, with resistance at $4,335 and $4,365. For silver, support is seen at $62.70 and $61.25, while resistance levels stand at $64.10 and $65.20.