Gold prices experienced a slight decline on Monday, July 21st. Spot gold settled at $4,007.32 per ounce, down approximately 0.2%, while the August futures contract also dipped around 0.1% to near $4,015.90. This movement occurred against a backdrop of escalating tensions in the Middle East, with ongoing U.S.-Iran conflict and Houthi forces announcing a maritime blockade against Saudi Arabia, which briefly pushed oil prices higher and rekindled inflation concerns. Concurrently, expectations for interest rate hikes by the Federal Reserve have notably strengthened. As a non-yielding asset, gold's appeal diminishes in a high-interest-rate environment. Although geopolitical risks typically provide support, the interplay of multiple factors has led to a cautious pullback in prices in the short term.
Technical Analysis Overview
From a technical perspective, the price has held above a key support zone. On the daily chart, multiple tests of lower levels have been followed by consecutive positive closes, with moving averages gradually turning upward to form support. After each retracement, losses have been quickly recovered, indicating steady restoration of bullish momentum. Resistance is observed in the 4095-4130 range. The 4-hour chart more closely reflects short-term fluctuations, with the price repeatedly stabilizing near the upper Bollinger Band. The pattern shows contracting volume on pullbacks and expanding volume on rallies, forming a converging ascending channel. Buying interest emerges to support the price upon each test of the support zone. Technical indicators show no clear overbought conditions, suggesting limited room for a short-term correction. Fundamentally, bullish and bearish forces are in balance. Expectations of sustained high Fed rates are capping the rebound's upside, preventing a strong unilateral rally and instead maintaining a volatile upward rhythm. For the day, support is watched in the 4035-4060 area, with resistance noted in the 4095-4100 region.
Summary and Strategy
In summary, it is suggested to consider selling on a rebound near 4095, with a stop-loss above 4110, targeting the 4060-4050 area. Alternatively, consider buying on a dip near 4040.
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