Gold prices experienced a notable pullback in the international market on Wednesday, June 4th. Spot gold fell by 1.2%, settling at $4,434.25 per ounce, with its current 200-day moving average support near $4,422.42. The US gold futures contract also declined by 1.2%, closing at $4,466.90. This drop stands out amidst the recent high-level consolidation of gold prices. The primary driver behind the decline was not a reduction in safe-haven demand, but rather a "reverse logic" stemming from escalating Middle East conflicts: war pushes up energy prices, heightens inflation expectations, and consequently strengthens market bets that the Federal Reserve will maintain high interest rates or even hike them further. As a non-yielding asset, gold is inherently pressured in a high-interest-rate environment. When the US dollar strengthens and real yields rise, its opportunity cost of holding increases significantly. This time, geopolitical tensions, instead of triggering the traditional safe-haven buying, have exerted additional downward pressure on gold prices through the inflation transmission channel.
Current Market Technical Analysis
From a daily chart perspective, the price recently tested a key support zone with a rapid decline but did not continue the bearish momentum. Instead, it quickly recovered the losses, forming a standard bullish reversal candlestick pattern, which is a typical signal of bottoming and a potential trend reversal. However, in the short term, the price remains pressured below the 5-day, 10-day moving averages, and the middle Bollinger Band. To decisively break free from this short-term resistance, the price needs to successfully stabilize above these moving averages. The bullish characteristics are more pronounced on the four-hour chart. The price has formed a V-shaped reversal pattern, with successive higher lows and a continuously rising rebound center of gravity. It has consecutively closed with positive candles, breaking through short-term resistance levels and completely disrupting the previous bearish structure. The moving average system has formed a golden cross in the lower range, creating a support zone for the bulls. Each minor pullback has been met with quick stabilization and a bounce, indicating solid buying interest at lower levels. Overall, bearish selling pressure has subsided, with bulls taking the lead. The recent short-term pullback appears to be merely a technical correction. With the bottom structure confirmed and key support holding, gold is expected to continue its relatively strong rebound following the recent bottoming-out process, favoring a strategy of buying on dips.
Key Support and Resistance Levels
The intraday trading strategy should primarily focus on buying on dips, with shorting as a secondary approach. Initial support is noted around the 4440 level. Holding above this level could lead to a second attempt by bulls to challenge the 4473 resistance or even break higher. Conversely, if this support fails, focus should shift to the morning low near 4424. While the price might enter a consolidation phase at that point, as long as the key defensive level holds, bullish performance within the range can still be anticipated. For resistance, the key area to watch is 4485-4495. If the bulls fail to break above this zone today, the likelihood of gold continuing its adjustment phase increases. However, a successful breakout, in my view, would likely elevate the consolidation range to 4400-4550, even if it doesn't immediately open up significant upside space.
Short-Term Trading Strategy
Consider a short position near 4440, with a stop-loss set at 4425, targeting a move down to 4480, where a counter-trend short might be considered.
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