On Monday, June 15th, during the early Asian trading session, spot gold opened higher and continued to rise on the back of news developments, currently up 2.6% or over 100 points, trading near $4,330, reaching its highest level in nearly a week.
The gold market opened last week at $4,329, initially dipped to a low of $4,267 before a short-term rapid rally saw it peak at $4,363 for the week, followed by a sharp pullback to a weekly low of $4,024. Subsequently aided by supportive fundamental factors, it closed the week at $4,217, forming a bearish candlestick with an extremely long lower shadow, resembling a hammer.
Key Fundamental Drivers
On the geopolitical front, the US and Iran have reached a historic peace agreement. Former President Trump stated that an Iran deal has been concluded, ensuring free passage through the Strait of Hormuz and the lifting of the US military blockade. The Pakistani Prime Minister claimed the US and Iran have reached a peace agreement, with both sides announcing an immediate and permanent cessation of military actions on all fronts. Iran's Deputy Foreign Minister indicated that the 14-point memorandum of understanding text between Iran and the US has been finalized, hostilities on all fronts are to end immediately, and the memorandum is scheduled for formal signing in Switzerland on Friday. Negotiations over the next 60 days will address four key issues. Meanwhile, Israel launched another attack on the southern suburbs of Beirut, Lebanon, with reports suggesting Iran called off a retaliatory strike on Israel at the last minute. Trump criticized Netanyahu, calling the Lebanon raid "devoid of judgment" and nearly jeopardizing the US-Iran agreement signing.
On the data front, international oil prices plunged over 5% to a more than two-month low following the US-Iran peace deal and the anticipated reopening of the Strait of Hormuz. US crude oil futures opened sharply lower, down nearly 5%, briefly touching $80.52 per barrel, marking the lowest level in over two months since April 17th. This has significantly cooled inflation concerns, slightly dampening expectations for a Federal Reserve rate hike within the year. The US Dollar Index opened lower on Monday and extended losses, falling as much as 0.38% to 99.42, hitting a new low since June 5th. The traditional inverse relationship between gold and the US dollar has been clearly demonstrated in this market move.
Other factors to watch include a busy week for central bank monetary policy decisions. The Federal Reserve's FOMC interest rate decision announcement early Thursday is undoubtedly the main event, with Chair Walsh's first press conference also a key focus for all traders. This week will also see monetary policy decisions from the Bank of Japan, the Reserve Bank of Australia, the Swiss National Bank, and the Bank of England.
Technical Perspective and Weekly Opening Analysis
From a technical standpoint, looking at the gold daily chart, today's gap higher opening is influenced by the US-Iran peace deal. The price has now moved above $4,300. It is anticipated that the early week's price action will primarily digest the impact of US-Iran related news, likely exhibiting relatively strong, albeit range-bound, behavior. However, upside potential remains limited. Initial focus will be on the battle around the 10-day moving average near $4,310-15. A sustained move above this level could then target the area around the 20-day moving average and the trendline near $4,410-20. Nevertheless, with the market's focus shifting to Thursday's Fed rate decision, any early-week strength is likely to be constrained. The ultimate direction will hinge on the Fed's decision regarding interest rate hikes.
Examining the gold one-hour chart, the week began with a gap higher opening, leaving a gap near $4,270-40. The early week will be watched to see if this gap gets filled. If it is filled without a breakdown, the short-term technical trend for gold would be relatively strong, potentially sustaining its rebound. Initial resistance above is seen around $4,315, which coincides with the 10-day moving average and the 200-hour moving average, both offering some resistance. If the price retraces to fill the gap early in the week, it may encounter resistance here. If the price remains strong and moves above $4,315, the next short-term target would be the previous high-low congestion zone around $4,350/60. A break above that could then target resistance near $4,420.
Today's Trading Strategy
For long positions, consider entering on a pullback near $4,260 for a short-term trade, with a manual stop-loss placed below $4,240. The target is the $4,310-20 area for partial profit-taking, with the remaining position held for potential further gains towards $4,350/60 and $4,400 before scaling out. For short positions, a moderate attempt at a short-term trade could be made if prices reach $4,350/60 or $4,400. Specific strategies should be adjusted in real-time based on actual market conditions.
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