In early Asian trading on Thursday, gold (XAU/USD) experienced a volatile decline, with prices falling to around $4730, continuing the corrective trend from the previous session. The primary driver of this pullback is a shift in market expectations regarding the Middle East situation. Although the conflict has not fully concluded, discussions surrounding a ceasefire have prompted some safe-haven capital to exit the gold market.
The United States has stated that the ceasefire agreement reached on April 7 remains in effect, pending the submission of a new proposal by the other party. However, the opposing side has yet to show willingness to engage in further negotiations, leading to a stalemate in diplomatic efforts. Previously scheduled high-level talks were canceled, significantly dampening market expectations for a substantive breakthrough in the near term.
Although the ceasefire framework persists, the situation has not genuinely eased. Key energy corridors remain at risk of blockade, and ongoing shipping disruptions continue to elevate energy costs. Market estimates indicate that this passage handles approximately 20% of global seaborne crude oil shipments. This supply uncertainty has kept oil prices elevated, further intensifying global inflationary pressures. Against this backdrop, expectations for interest rate cuts by major economies have been pushed back, maintaining a tight monetary policy environment.
From an asset perspective, gold typically serves as a safe haven during periods of heightened geopolitical risk. However, its characteristic of generating no interest becomes a significant disadvantage in a high-interest-rate environment. Currently, elevated U.S. Treasury yields have increased the opportunity cost of holding gold, acting as a major factor suppressing its price. Consequently, even with inflationary support, gold's upside potential remains limited.
Simultaneously, the U.S. dollar's trajectory significantly influences gold. If subsequent negotiations yield positive signals, boosting market risk appetite, the dollar may weaken, thereby supporting dollar-denominated gold. Conversely, if talks remain deadlocked or worsen, although safe-haven demand might return, the high-interest-rate environment would still constrain the pace of any gold price increase.
Technically, on a daily chart, gold remains within a high-level consolidation pattern. While the overall trend has not turned bearish, upward momentum has noticeably weakened. A short-term resistance has formed near $4800, with key support at $4700. A break below this level could lead to a further test of the $4650 zone. Momentum indicators suggest bullish strength is receding, indicating a market consolidation phase. On the 4-hour chart, gold shows a oscillating downward structure, with short-term moving averages beginning to turn lower. If a rebound fails to stabilize above $4750, the risk of continued correction persists. However, a break above $4780 could signal a resumption of the uptrend toward testing previous highs.
Overall, gold is currently caught between support from geopolitical risks and pressure from high interest rates. In the short term, market focus remains on developments in Middle East negotiations and changes in energy supply risks, which will directly influence inflation expectations and monetary policy paths. From a medium-term perspective, as long as interest rates remain high, gold's upside will be constrained. However, should clear signals of a policy shift emerge or if geopolitical tensions escalate again, gold would have a foundation for renewed strength. Investors should closely monitor changes in interest rate expectations and the dollar's movement, as these two variables will determine gold's next directional phase.
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