During the European session on Tuesday, spot gold continued its decline, trading within the previous session's range and maintaining a weaker trend for the third consecutive day. Although the downward movement lacked significant volume, overall market sentiment remained bearish.
From a macroeconomic perspective, the strengthening US dollar is the primary factor currently suppressing gold. As uncertainty in the Middle East escalates, the US dollar is attracting inflows as a safe-haven asset, reinforcing its status as the global reserve currency. Concurrently, US economic data has shown resilience, particularly the previously released strong non-farm payrolls report, which has reinforced market expectations that the Federal Reserve will maintain high interest rates, thereby exerting sustained pressure on gold.
At the same time, renewed inflation expectations have emerged as a key variable. Influenced by rising energy prices, the market widely anticipates a resurgence of inflationary pressures. According to data from the Institute for Supply Management, the services price index climbed to 70.7, significantly higher than the previous reading, indicating increased cost pressures. This has further solidified market expectations of "higher-for-longer" interest rates, diminishing the appeal of gold as a non-yielding asset.
From a geopolitical standpoint, tensions surrounding the Strait of Hormuz continue to develop. Former US President Donald Trump has set a deadline for relevant parties to restore passage, threatening strong measures otherwise. Although concerns about an escalation of conflict persist, safe-haven flows are favoring the US dollar over gold, providing limited support for the gold price.
Additionally, rising crude oil prices are indirectly pressuring gold. Higher energy prices not only boost inflation expectations but also increase the likelihood that central banks will maintain tight monetary policies, making it difficult for gold to attract sustained buying interest.
From a technical perspective, on the daily chart, gold has entered a corrective phase. The price has repeatedly faced rejection near previous resistance zones, indicating significant selling pressure above. The short-term trend has shifted from strong to weak, with the structure suggesting a bearish consolidation pattern. If the price remains below key resistance levels, the medium-term correction is likely to continue.
On the 4-hour chart, gold is trading within a downward structure, consistently pressured by the 200-period moving average, which acts as a clear trend resistance. The current price below this moving average confirms the short-term bearish bias. The MACD indicator is operating below the zero line, with the histogram remaining negative, indicating that bearish momentum persists but has not intensified significantly. The RSI is near 49, in a neutral-to-weak zone, suggesting the market is in a phase of consolidation with a downward bias. Key levels to watch include initial resistance around $4,600, corresponding to the 38.2% Fibonacci retracement level. A break above this level could lead to a test of the $4,760 area (the 50% retracement level). However, until the price breaks above this range and the 200-period moving average, any rebound may be viewed as an opportunity to sell at higher levels. Support is seen near $4,600; a break below this level could target the $4,400 area as the next objective.
The core logic driving the current gold market centers on "dollar strength and high interest rate expectations." Although geopolitical tensions persist, their supportive effect on gold is notably weaker than in the past, with capital flows favoring dollar-denominated assets. Rising inflationary pressures and expectations of tighter central bank policies are keeping gold under pressure. In the short term, unless key resistance levels are breached, gold is expected to remain in a corrective phase, likely maintaining a weak consolidation pattern, with further downside risks requiring caution.
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