Gold prices found their footing last week, closing higher after a dip-and-rebound session on international markets, as the metal failed to decisively break below its 60-week moving average. The weekly candlestick pattern suggests a possible halt to the downtrend and hints at a bullish reversal. Early in the week, a Saudi east-west pipeline outage following an attack rattled crude supply, intensifying inflation concerns, while expectations of a U.S. rate hike pushed bullion lower. However, after the Federal Reserve delivered its quarter-point hike, the selling pressure eased. Meanwhile, de-escalation in the Middle East and reports that Saudi Arabia secured alternative export routes triggered a two-day drop in oil prices, soothing inflation fears and driving gold back up, ultimately closing the week in positive territory.
Trading action saw the metal open the week lower at $4,334.95 per ounce, slipping to a weekly low of $4,235.00 on Wednesday. From that point, it bounced back, climbing to a high of $4,399.41 on Friday and settling at $4,380.07. The weekly range spanned $164.41, with a gain of $33.71, or 0.78%, versus the prior week's closing price of $4,346.36.
Looking to the start of this week, Monday (September 21) saw bullion open lower at $4,377.20 and trend weaker in early action. But tensions in the Middle East escalated sharply over the weekend. On Thursday evening, Yemen's Houthi forces announced two military operations, pushing crude prices higher and lifting inflation expectations, which strengthened the U.S. dollar index and pressured gold's upside. However, Qatar hinted that the U.S. and Iran are still in communication through multiple channels, with Washington expressing readiness for negotiations to reach a deal and end the conflict. That capped oil's rebound and eased inflationary pressures. As a result, gold's early weakness offers a potential dip-buying opportunity, with support levels likely to hold and attract bullish interest.
From a fundamental perspective, the Fed's 25-basis-point rate hike in September marks the first since July 2023. While policymakers hinted at another possible hike this year, the current rate expectations are largely priced in. Further data or a rise in inflation would be needed to boost odds of another move and pressure gold. Meanwhile, the Middle East situation, though ongoing, has seen reduced risk premiums after Saudi Arabia secured alternative export routes, easing inflation worries. Overall, the bearish pressure has clearly weakened, supporting a near-term bounce in gold prices. That said, the year's broader outlook hasn't fully reversed, as the Fed still signals more hikes and geopolitical risks remain unresolved. Consequently, prices are likely to oscillate in a broad range for now.
However, the long-term bull case remains intact. If inflation proves stickier than the Fed anticipates, or if geopolitical conflicts expand and systemic risks rise, gold's role as the ultimate safe haven could re-emerge. Historical parallels from the three major oil crises show that while oil spiked initially, prices eventually fell, crises subsided, and Western economies slipped into recession. Though the Fed was forced to tighten each time, gold never sustained a prolonged decline and ultimately entered new bull markets. Similarly, during the aggressive tightening from 2022 to 2023, gold didn't experience a significant crash, staying within a defined range before resuming its climb. Thus, the current rate hike cycle is unlikely to drive sustained downside; instead, prices are poised for a consolidation phase, absorbing bearish pressures before eventually pushing to fresh record highs.
For short-term, intraday, or weekly traders, the fundamental outlook and directional bias may be less critical. Long-term holders, like those accumulating gold bars or physical holdings, can consider scaling into positions at current lows or on any further pullbacks, aiming for eventual retests of historical peaks.
On the monthly chart, gold is trading within the range of its 5- and 10-month moving averages. Though momentum indicators still show bearish signals, the upward tilt of the Bollinger Bands on the main chart suggests a multi-month consolidation phase, with the broader direction remaining bullish for new highs. This sideways movement can be viewed as an entry opportunity for longer-term investors.
The weekly chart shows the metal rebounding after failing to close decisively below the 60-week moving average. However, multiple moving averages overhead present resistance. Unless prices rally above August's highs, the risk of further range-bound trading or a drop to new lows remains. Until then, a strategy of periodic rebounds and pullbacks is suitable for short-to-medium-term trading.
On the daily chart, gold has bounced off support near the 60-day moving average and reclaimed the 100-day MA. Bearish momentum is fading, with bullish strength building. The 100-day and 60-day MAs continue to act as supportive floors, and as long as these levels hold, the bias favours buying dips with an eye on the 200-day MA resistance target around $4,540.
For intraday positioning, key support lies at $4,340 and then $4,290, while resistance is seen at $4,400 and then $4,420. For silver, support is at $65.80 and then $65.10, with resistance at $67.50 and then $68.10. Precise entry and exit points will be shared via live trade updates.
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