On Tuesday, April 7, during early Asian trading hours, spot gold opened with sideways movement before edging slightly lower, currently trading near $4,650. The previous day, Monday, April 6, gold opened lower, stabilized around $4,600, and began fluctuating upward. It reached a peak near $4,707 during European trading before encountering resistance and turning downward. U.S. trading hours saw a continued decline, with the price dropping to around $4,645 by early morning, resulting in a daily candlestick with a small real body and upper and lower shadows.
On the fundamental front, Iran has explicitly stated its desire for a permanent end to hostilities with the United States and Israel. Through Pakistan, it submitted a ten-point response to the U.S., clearly ruling out any temporary ceasefire and emphasizing the need for a permanent resolution to the conflict. Iran's demands include establishing a security protocol for safe passage through the Strait of Hormuz, lifting sanctions, and post-war reconstruction. Shipping traffic through the Strait of Hormuz has risen to its highest level since early March. Former U.S. President Donald Trump suggested that the U.S. should collect tolls for passage.
From the U.S. perspective, Trump escalated his rhetoric during a press conference on Monday, stating that "the entire nation of Iran could be wiped out overnight, and that night could be Tuesday evening." He reaffirmed that the Tuesday 8 PM Eastern Time deadline is "non-negotiable," "highly unlikely to be extended again," and "will not be changed." He described Iran's latest peace proposal as "significant but not good enough."
In other developments, influenced by Trump's stern threats, U.S. crude oil (WTI) prices rose steadily during the session and are currently trading near $115. Despite safe-haven demand driven by Middle East tensions, U.S. stock markets saw moderate gains at the start of the week. Soaring oil prices, coupled with strong U.S. non-farm payroll data released last Friday, have reinforced expectations that interest rates will remain elevated for an extended period, creating a bearish environment for gold and silver prices.
Key macroeconomic data releases are scheduled for this week: the minutes from the Federal Reserve's March policy meeting will be published on Wednesday, followed by weekly initial jobless claims and Personal Consumption Expenditures (PCE) data on Thursday, and Consumer Price Index (CPI) figures on Friday. According to the CME FedWatch Tool, traders currently see a very low probability of the Fed cutting interest rates this year, following its decision to maintain rates last month.
From a technical perspective, the daily chart for gold suggests a high likelihood of continued consolidation. Resistance is observed near the 5-day moving average around $4,670-75, with major resistance around the 20-day moving average near $4,730. Support is focused near the 10-day moving average around $4,570. A breakout from this range will likely depend on developments in the news. Should a ceasefire agreement be reached between the U.S. and Iran, even if temporary, the U.S. dollar index could decline, potentially allowing gold to rebound and break above the 20-day moving average near $4,730. However, further upside may be limited, with key resistance expected in the $4,800-50 range. If no agreement is reached and hostilities escalate, the U.S. dollar could strengthen further, potentially causing gold to break below the 10-day moving average support near $4,570 and resume its downward trend.
Looking at the 1-hour chart, gold experienced another decline in early trading today, shifting the center of gravity lower. The moving averages on the hourly chart have crossed downward, increasing the risk of a further pullback. Intraday expectations are for range-bound consolidation, but with a bias towards continued corrective downward movement. For trading strategy, the primary approach for the day could be to wait and observe, pending clarity on whether a U.S.-Iran ceasefire agreement will be reached tomorrow. Although the likelihood of an agreement is low, caution is advised due to the unpredictable nature of recent statements, making risk management challenging. Aggressive traders may consider range-trading strategies within the expected bounds, executing short-term buy-low and sell-high trades, but with a preference for short positions at higher levels.
Today's trading suggestion: Consider a light short position if the price rebounds near $4,680, with a stop-loss set above $4,700, targeting a move down towards $4,600. Given the potential for sudden news-driven volatility, conservative investors may prefer to adopt a wait-and-see approach.
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