The US-Iran memorandum of understanding framework agreement has boosted market risk sentiment, propelling gold prices higher at the start of the new trading week. However, analysts note that the precious metal still faces significant technical resistance, and the sustainability of the rebound remains to be seen.
On Tuesday, gold attempted to extend gains following the previous day's recovery, currently trading around $4,330. Market focus is shifting towards the upcoming Federal Reserve policy decision.
Although final details of the agreement are not yet confirmed, the market widely expects the content to largely align with the framework outline that emerged last week. This has led to a broad recovery in risk assets, with US equities also receiving a lift.
Concurrently, as market expectations grow for a gradual reopening of the Strait of Hormuz and crude oil prices retreat, inflation expectations have cooled. This has provided support for gold. Market participants believe that easing inflation pressures could weaken the hawkish stance of the Federal Reserve and other major central banks, a key factor that has been weighing on gold recently.
From a technical perspective, after briefly falling below the March low last week, the gold price has rebounded swiftly, initially forming a potential "double bottom" chart pattern, often viewed as a potential bullish reversal signal.
Nevertheless, analysis indicates that a trend reversal still requires more confirmation signals.
The most critical resistance level is currently situated near the 200-day moving average, around $4,450. If this level cannot be decisively breached, the overall bearish technical structure for gold is likely to persist.
It is noteworthy that last week, following the US employment data, the gold price broke below its long-term moving average support, marking the first time since October 2023 that it simultaneously fell below several key daily moving averages. This structural breakdown has not yet been fully repaired.
Subsequent market movements will heavily depend on the actual progress of navigation recovery in the Strait of Hormuz.
The prevailing market expectation is for the waterway to enter a phase of "gradual restart," with the recovery process potentially lasting about 30 days, involving safety operations such as mine clearance.
However, analysts point out that a full restoration to pre-conflict levels remains uncertain, and the actual pace of recovery may fall short of the expectations conveyed in political statements.
Some views even suggest that if shipping data deviates from the official narrative, the market could face repricing risks.
Analysts conclude that gold is currently in a phase of "emotionally driven rebound with technical structure awaiting confirmation."
Upside drivers include receding inflation expectations and stabilizing interest rate outlooks.
Upside resistance is presented by the 200-day moving average.
The core variable remains the progress of Strait of Hormuz navigation and the corresponding feedback from oil prices.
If oil prices continue to decline and reinforce expectations of falling inflation, gold may have further room to rise. However, if geopolitical narratives diverge from actual data, market volatility could intensify once again.
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