Gold markets last week: International gold prices retreated to close lower, erasing the prior week's gains and falling back below the 5-week moving average, indicating some dominance by bearish forces. Despite former President Trump's repeated assertions that the war would end soon, which alleviated market concerns about inflation, buying momentum for gold struggled to sustain. However, Iran's continued blockade of the strait, with no signs of easing geopolitical tensions, continues to support the bullish outlook for oil prices, fueling inflation worries, persistently dampening expectations for interest rate cuts, and putting renewed downward pressure on gold prices.
Therefore, before gold prices can stabilize above the 5-week moving average, the outlook suggests a period of consolidation with an expectation of a pullback to test the support of the middle Bollinger Band (currently around $4,600). If prices manage to climb and sustain above the 5-week moving average and the $5,200 mark, a bullish move towards targets of $5,400 or $5,600 could be anticipated.
In terms of specific price action, gold opened higher at the week's start at $5,179.47 per ounce, initially dipped to touch $5,014 before rebounding. It failed to hold above the support of the middle Bollinger Band and the 30-day moving average. After recording the week's high of $5,238.30 on Tuesday, bullish momentum waned, leading to a consecutive decline that continued into Friday, pushing the price below the 30-day moving average and setting a new weekly low of $5,009.60, below Monday's low. The price eventually found some support and recovered slightly, closing the week at $5,024.58. With a weekly trading range of $228.70 and a close down $45.55, or 0.9%, from the previous week's close of $5,070.13.
Looking ahead to this Monday (March 16th): International gold opened lower at $4,999.10 per ounce, quickly recovering the gap, but bullish momentum remains subdued below moving average resistance, failing to strengthen. This suggests a continued inclination for further declines within the week.
Additionally, while crude oil opened higher due to unresolved weekend geopolitical tensions, it weakened after the opening as the US and several other countries agreed to form a coalition to provide escort for vessels passing through the Strait of Hormuz, alleviating concerns about an oil supply premium. While this provides some support for gold prices, oil's overall trend remains upward. Iran's firm stance, expressing no fear of foreign escorts, means market bullish prospects for oil remain intact, likely reinforcing inflation concerns and thereby limiting gold's rebound potential.
Furthermore, although the US Dollar Index opened weaker, supporting gold, its overall trend remains in a rebound phase without clear signs of a significant downturn. Therefore, unless gold reclaims the $5,200 level, it still faces adjustment pressure.
Fundamentally, according to Zhang Yaoxi's comments; gold's safe-haven attributes are currently fading. With oil being the dominant driver of market fluctuations, the resulting inflation worries not only diminish expectations for rate cuts but also bolster the US dollar, consequently weighing on gold prices. This sidelines gold's traditional safe-haven role.
Currently, expectations for Fed rate cuts are weakening. If inflation continues to rise as anticipated, expectations for rate hikes could begin to dominate market direction, likely leading to sustained consolidation or a downward trend for gold prices in the near term.
However, from a longer-term perspective, even if geopolitical tensions persist and inflation continues to heat up, a scenario similar to 2020-2022 could unfold. During that period, oil prices surged from negative territory directly to $129.40 per barrel, US inflation jumped from 1.23% to 8%, and the Fed implemented seven consecutive significant rate hikes. Despite this, gold prices largely consolidated within a $400 range before embarking on a sustained upward climb.
Comparing this to the period from July 2007 to August 2008, when international oil prices doubled from $70 to $140 per barrel, and the subprime mortgage crisis began to manifest, gold prices consolidated before entering a prolonged bull market.
Additionally, due to US debt and economic recession concerns, even a shift towards rate hikes would likely be limited in scope. The probability of aggressive, inflation-beating rate hikes is very low. This could instead exacerbate fears of stagflation. Moreover, Fed data shows the M2 money supply growth rate has stagnated at around 4% over the past year, suggesting inflation might not rise as sharply as feared. In that case, gold prices would likely remain within a wide range but would not see their broader bull market reversed.
If geopolitical conflicts were to end, gold prices would likely revert to being driven by the original rate cut expectations, resuming their upward trajectory. Therefore, given the current support from long-term geopolitical uncertainty, persistent central bank purchasing, and the ongoing potential for a rate-cutting cycle, all bearish factors are considered short-term pressures. Gold still possesses further bullish prospects. Any adjustments or declines occurring in the first half of the year could still be viewed as entry opportunities.
Technically, on the monthly chart, gold prices are currently showing weakness this month but remain above the 5-month moving average and the ascending trendline broken through in January. This suggests the bull market outlook remains intact. If the decline continues this month, support at the 5-month ($4,800) or 10-month ($4,400) moving averages could be seen as potential launch points for the next bullish phase. Conversely, a close below the trendline support around the $4,300 mark would signal the end of the bull market, potentially leading to a drop towards $3,500 or even the $3,000 level.
On the daily chart, gold is in a consecutive decline, trading below the short-term moving averages, the middle Bollinger Band, and the 30-day moving average, indicating bearish dominance. Trading strategy leans towards selling on rallies. However, the current pattern after the higher open suggests limited downside, with the market likely seeking support for a rebound. The vicinity of the 60-day or 100-day moving averages could present opportunities for re-entering long positions.
For specific real-time trading guidance, refer to live account information.
Preliminary intraday trading level references (specific entry/exit points subject to real-time account notification): Gold: Support to watch around $4,955 or $4,870; Resistance to watch around $5,070 or $5,120. Silver: Support to watch around $78.30 or $75.10; Resistance to watch around $81.00 or $83.00.
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