How should the outlook for gold be viewed?
On Tuesday, July 8th, despite a significant escalation of tensions in the Middle East's Strait of Hormuz, where attacks on multiple oil tankers led to a sharp spike in oil prices, spot gold fell by 1.42%, closing at $4,105 per ounce. During the session, it even briefly fell below the key $4,100 level to $4,092. This price action aligns with the market's established trading logic over the past four months: heightened Middle East tensions that boost oil prices often elevate global inflation expectations, thereby increasing the probability of the Federal Reserve maintaining higher interest rates, which in turn exerts periodic pressure on gold prices. Investors are now primarily focused on the upcoming release of the Fed's June meeting minutes, seeking clearer guidance on the future path of monetary policy.
From a technical perspective, the gold price is currently in a high-level consolidation range following its previous rise. The medium-term bearish structure remains intact, but short-term bearish momentum has waned, leading to intensified divergence between bulls and bears. On the daily chart, the moving averages maintain a bearish alignment, with price action suppressed below the short-term 5 and 20-day averages. The Bollinger Bands are contracting and flattening, with the gold price oscillating between the middle and lower bands, indicating a need for technical adjustment. There is insufficient momentum for a sustained move in either direction in the short term. On the 4-hour chart, the momentum indicators are switching back and forth frequently. The energy behind any rebounds is diminishing progressively, while declines find buying support at lower levels, highlighting clear range-bound characteristics. Hourly chart volatility has narrowed, trading activity is light, and there are no signals for a one-sided breakout. The previous high above forms a strong resistance zone, while moving average support below is solid. Until a breakout from the range occurs with significant volume, the primary strategy should be to sell high and buy low within the range. Chasing rallies at elevated prices is strongly discouraged. The focus should be on awaiting data catalysts and observing the direction of a potential range breakout before positioning accordingly. Resistance above is watched at the $4,150-$4,180 zone, with support below at $4,100-$4,080.
In summary, it is suggested to consider buying on dips near $4,100, with a stop-loss at $4,180, targeting the $4,150-$4,180 area for potential short positions.
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