On March 16, last week's continued uncertainty surrounding the Iran conflict bolstered the US dollar's status as a safe haven, pushing the dollar index higher. Strengthened by the robust dollar and market expectations for reduced global central bank rate cuts, spot gold closed the week with two consecutive weekly declines. This week, aside from Middle East tensions, the primary focus will be on the Federal Reserve meeting and Chair Powell's speech early Thursday, which are expected to directly influence gold price movements.
Monday, March 16, marks the third week of the Middle East conflict. According to senior aides to former President Trump, the conflict is anticipated to persist for another four to six weeks. A fundamental disagreement exists between the US and Iranian positions: Trump stated that Iran "wants a deal but the US demands better terms," while Tehran has clearly indicated it is "not seeking negotiations or a ceasefire." Trump also expressed that he is not prepared to reach an agreement with Iran.
It can be said that direct safe-haven demand stemming from geopolitics remains present and has even intensified due to the conflict lasting longer than initially expected. However, its transmission path to gold prices has seen a "diversion"—some safe-haven flows are being attracted to the US dollar, owing to its status as a primary global safe-haven currency, and to crude oil, due to the energy crisis itself. This has weakened short-term buying momentum for gold. Consequently, the gold price has been maintaining a broad range-bound oscillation.
From a technical perspective, early this week, initial resistance for gold is observed around the daily moving average band at 5100-5120. As long as the price does not break back above this moving average band, the technical outlook for gold will remain biased towards weakness and a downward trend. Looking at the hourly chart, resistance near 5050/5060 may not be breached early in the week, particularly on Monday. If overcoming the 5050/5060 level proves difficult, expectations for a primarily bearish trend this week would significantly increase. Support for the week is watched near the lower boundary of the daily chart's trading range around 4900. Should the US-Iran conflict show signs of easing, leading to a dissipation of market risk aversion, gold could experience a more pronounced corrective decline, potentially retreating towards the 4600-4500 zone from a medium-term perspective.
In summary, the gold price is currently caught in a state of high volatility without a clear directional trend. Last Friday's continued decline in gold, followed by today's early session "cliff-like plunge" and subsequent rapid recovery, are direct manifestations of this ongoing battle. In the short term, a strong US dollar and persistent inflation are expected to continue exerting pressure on gold and silver. However, geopolitical risks have not subsided, leaving the market in a phase of tug-of-war between bullish and bearish forces. Gold prices are anticipated to maintain a high-volatility, range-bound pattern ahead of the Federal Reserve meeting.
Therefore, the intraday trading suggestions are as follows: Gold: Operate within the 4950-5040 range. Set a stop-loss of 10 USD and a take-profit target of 60-70 USD.
Key economic data and events to watch today, Monday, March 16: 20:30 US NY Empire State Manufacturing Index for March 21:15 US Industrial Production Month-over-Month for February 22:00 US NAHB Housing Market Index for March
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