Gold experienced volatile swings with a rebound last week, primarily influenced by market expectations regarding US-Iran negotiations. On Monday morning (April 13, Beijing time) during the Asian session, spot gold opened with a significant gap down, falling over 2%, after weekend talks between the US and Iran concluded without an agreement. After closing near $4748 at the end of last week, gold hit a low of $4644 in early trading before rebounding. It has since recovered most of its losses and is currently trading around $4720.
On the fundamental front, the approximately 21-hour talks held in Islamabad over the weekend failed to produce any agreement. The negotiations stalled primarily over three major sticking points: the reopening of the Strait of Hormuz, issues concerning enriched uranium, and the unfreezing of Iranian overseas assets. Following the breakdown, both sides resumed a hardline stance. The US announced it would begin blocking all vessels entering or leaving Iranian ports starting at 10:00 AM Eastern Time on April 13 (22:00 Beijing time), but stated this would not impede the freedom of navigation for ships traveling to and from non-Iranian ports via the Strait of Hormuz. Concurrently, former President Trump is considering limited strikes against Iran. The Iranian military emphasized that all vessel movements within the Strait of Hormuz are under the strict monitoring and complete control of its armed forces, warning that any misstep would inflict severe losses on the enemy.
Global financial markets were once again roiled by Middle East tensions. Market reactions included WTI crude oil gapping significantly higher at the week's open, rising approximately 8% and quickly approaching the key psychological level of $105 per barrel. Brent crude also strengthened, contributing to a broad-based rise in global energy prices. It is important to note that the Strait of Hormuz, one of the world's most critical energy transit chokepoints, handles about 20% of globally seaborne crude oil. Any blockade or disruption could rapidly alter the supply-demand balance. The US Dollar Index rose by up to 0.47% to 99.19, swiftly recouping previous losses and gaining against all major currencies.
Simultaneously, US macroeconomic data intensified the market's reassessment of interest rate policy. Data showed that the US Consumer Price Index (CPI) for March rose 3.3% year-over-year, up from the previous 2.4%, with a monthly increase of 0.9%, significantly higher than prior levels. Core CPI increased 2.6% year-over-year and rose 0.2% month-over-month. These figures indicate persistent inflationary pressures and have substantially cooled market expectations for a Fed rate cut in the near term.
From a technical perspective, examining the daily chart for gold, there was another attempt to push higher last Wednesday. However, lacking sufficient bullish momentum, prices briefly rallied before falling back again, subsequently entering a cautious, range-bound state influenced by fundamental news. The failure of the US-Iran talks over the weekend led to today's gap down, breaking below the 5-day and 10-day moving averages and piercing the 20-day moving average. Although there is currently a rebound towards the 5-day average, the technical structure suggests this downward correction is essentially formed. If there are no positive developments from news flow this week, gold may continue its oscillatory downward correction. An escalation in Middle East tensions could accelerate the pace of this decline.
Looking at the 1-hour chart for gold, key resistance in the early week is focused around the hourly moving average band and the trendline pressure zone of $4730-40. The 5-day moving average is also near $4730. As long as the price remains below the gap resistance at $4740, the technical bias will remain relatively weak, though further downward adjustment will still require supporting fundamental news. Key support to watch in the early week is around the 20-day moving average at $4660. A decisive break below this level would make the technical downtrend more pronounced.
Trading recommendation for today: In early week trading, consider light short positions on a rebound towards $4730, with a manual stop-loss set above $4740. The initial target is around $4700, where positions can be adjusted to break-even or partially reduced. Remaining positions can target further declines to $4650 and $4600 for exit.
Comments