April 7: In the previous trading session on Monday (April 6), international gold prices closed slightly lower with a doji candlestick, indicating muted activity. The price faced downward pressure from the strong US non-farm payrolls data released last Friday and rising oil prices due to escalating geopolitical tensions. However, the number of vessels transiting the Strait of Hormuz reached its highest level since early March, tempering the momentum of oil price gains. Consequently, gold held above its 10-day moving average. With the Bollinger Bands contracting, the market showed limited reaction to both the escalation and potential de-escalation of geopolitical factors, suggesting near-term price action is likely to be dominated by sideways consolidation. Despite this, a bullish outlook is maintained.
In specific price action, gold opened the Asian session at $4,667.68 per ounce, initially dipped to a daily low of $4,600.66, then reversed course and climbed to a daily high of $4,706.21 during the European session around 17:30. From there, it encountered resistance and retreated, oscillating weakly through the latter part of the US session before settling into a narrow range above $4,646. It ultimately closed at $4,650.19, with a daily range of $105.55, down $17.49 or 0.37%.
Looking ahead to Tuesday (April 7): International gold opened with some resilience, halting the previous decline. The increased vessel traffic in the Strait of Hormuz has dampened the bullish outlook for oil prices and inflation expectations. Additionally, the US Dollar Index declined yesterday and shows technical divergence, hinting at potential downside risks which could support gold prices. Therefore, in the near term, gold is expected to consolidate with a bias towards strengthening.
Key data to watch during the day includes the US February Durable Goods Orders monthly rate and the New York Fed's one-year inflation expectation for March. Market expectations lean towards being favorable for gold. Even if the data comes in better than expected or previous values, trading is still anticipated to be primarily range-bound.
Furthermore, the main focus this week is the FOMC Meeting Minutes scheduled for Thursday at 02:00. These may reveal officials' concerns about inflation and the potential economic impact of the Iran conflict and related disruptions to energy and other commodity flows. Also key is the US March CPI data on Friday at 20:30. Market forecasts suggest the CPI could rise by around 1%, largely driven by higher gasoline prices due to the Iran conflict, which would mark the largest monthly increase since 2022. Both events could dampen expectations for Fed rate cuts, potentially weighing on gold. If geopolitical tensions persist this week and data meets expectations, yet gold fails to recapture last week's gains and breaks below the 30-day moving average support, strong bullish positioning and weakening bearish sentiment could still pave the way for further price increases.
Fundamentally, markets are awaiting further signals regarding the US-Iran situation ahead of Trump's reported "deadline," with the deadline for an agreement set for 08:00 Beijing time on Wednesday. Iran has rejected a temporary ceasefire, insisting on a permanent end to the war. Considering Iran's ten demands, reaching an agreement appears difficult, and tensions may escalate again, potentially pressuring gold prices lower. However, if the deadline passes without large-scale airstrikes, even without a deal, markets might still interpret this as positive news, leading to a gold price rebound. The actual developments following the deadline warrant close attention.
Additionally, the US March Services PMI showed surging prices, hitting a new high since October 2022. Two Fed officials warned of severe inflation pressures, hinting at a potential need for tighter, not looser, monetary policy. Wells Fargo and Citigroup have delayed their expectations for Fed rate cuts. These factors have weakened the near-term bullish outlook for gold, suggesting potential for sideways consolidation.
Over the longer term, the dominant factor remains oil prices. The longer the conflict persists, the more likely energy prices will stay elevated, further fueling inflation and forcing the Fed to maintain current interest rates, delaying the start of a rate-cutting cycle. This would limit significant upside for gold. Conversely, a weakening oil price outlook could bolster gold prices.
Therefore, looking ahead, if the Strait situation is resolved, gold could once again rally based on its safe-haven appeal and renewed rate-cut prospects. Otherwise, it may continue to adjust within a range due to inflation concerns and diminished rate-cut expectations. However, the longer-term outlook remains bullish. Rising inflation enhances gold's appeal as a commodity, and the risk of stagflation persists. Consequently, regardless of the immediate geopolitical outcome, the current price dip and pressure are viewed as a mid-cycle correction within a larger upward trend, albeit with varying durations. Gold is still expected to climb to new highs within the next year.
Technically, on a monthly chart, gold closed March above a rising trendline, maintaining its bullish prospects. The current month's opening price also remains within this upward trajectory. As long as monthly closes hold above this trendline, the potential for new highs remains.
On the weekly chart, gold extended its rebound from the previous week's lows as anticipated, showing recovery momentum and strengthening further. However, failure to decisively break above the midline of the Bollinger Bands or the resistance posed by the 5 and 10-week moving averages has prevented a solid strengthening of bullish momentum, leaving room for potential pullbacks and adjustments.
Support is found at the 30-week moving average. Strategically, for the week, one might consider bullish rebounds from this support level. A breakout above the resistance of the 5 and 10-week moving averages could signal a strengthening trend and be followed for a move towards new highs.
On the daily chart, gold is trading below the Bollinger Band midline but above the 10-day moving average, indicating indecisive, sideways movement. Failure to reclaim and hold above the 60-day moving average could lead to further consolidation and a potential decline towards the support of the 200-day moving average (currently around $4,200).
For near-term trading strategies, consider bullish entries near the support of the 10-day and 144-day moving averages. The midline of the Bollinger Bands and the 30-day moving average can be viewed as resistance levels for potential short positions.
For specific, real-time trading guidance, refer to live account information.
Preliminary intraday trading level references are provided below. Exact entry and exit points should be confirmed via live account notifications: Gold: Support levels to watch are around $4,580 and $4,460; resistance levels are around $4,680 and $4,730. Silver: Support levels to watch are around $71.65 and $69.55; resistance levels are around $74.60 and $75.70.
Comments