On Monday, July 14, support and resistance levels for gold were outlined, with emphasis placed on the scenario that if the price failed to surpass the opening decline point at 4102, it would likely experience another downward move. Subsequently, the price broke below the 4043 low from the Asian/European session, driven by U.S.-Iran news, leading to a significant drop. After breaching the 4000 level, the decline continued, with the price currently reaching a low near 3983.
Attention should remain on the U.S.-Iran situation. Such news-driven events can emerge and fade quickly, with geopolitical developments often cyclical and subject to change. Therefore, excessive bearish sentiment is unwarranted, and traders should be cautious of potential whipsaw price action. The key event for this week is the upcoming CPI data release tonight, which will be crucial for further pricing the magnitude and frequency of subsequent interest rate hikes. Given the high degree of uncertainty, this data point warrants close monitoring.
Based on the current price action, gold has rebounded from the 3983 low to the vicinity of 4020. This level represents the opening decline point from the late-night/early morning session. A sustained move above this point could lead to further upward momentum, with initial resistance around 4046 and a more significant resistance zone near 4070. On the downside, support levels are situated around 3980 and 3940.
Regarding trading strategy, consider a long position on a dip to the 4000 area during the European session, using the 3983 low as a stop-loss, targeting a 40-point gain. For a short position, look to sell on a rebound below the 4070 zone. If the price fails to break above 4046 in the afternoon session, a light short position could be considered, with a stop-loss at 4050 and a target of 30-40 points.
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