On June 16th, Monday, we noted that the potential for a US-Iran peace deal pressured oil prices to fresh three-month lows, easing market inflation concerns. This led to reduced expectations for a Federal Reserve rate hike, weighing on the US dollar and Treasury yields while supporting a gold price rebound. Additionally, short-term technical analysis indicated that after finding a bottom and rebounding, gold had the potential for further gains. Therefore, for trading, we suggested focusing on support levels at $4,309 and then $4,280, with resistance levels at $4,366 and then $4,400.
Looking at the subsequent price action, during the Asian session on Monday, gold encountered resistance after rebounding to $4,333 and experienced a slight pullback, finding a bottom at $4,300. After the European market opened, gold continued its rebound, with the upward trend extending after the US market opened, reaching a daily high of $4,369. Subsequently, the gold price met resistance and pulled back, stabilizing around $4,306 before the close. Overall, gold stabilized above the key $4,300 level and continued its advance, but encountered resistance near our indicated level of $4,366, showing that short-term selling pressure remains and the overall downside risk has not been eliminated.
Key Market Drivers
The rebound in gold from a six-month low is primarily attributed to easing tensions in the Middle East and cooling inflation expectations, which provided significant support for the precious metal. Specifically, last week's sudden announcement by the former US administration to cancel a military strike on Iran, followed by news of a potential US-Iran peace deal and the opening of the Strait of Hormuz, led to a decline in oil prices to fresh three-month lows. The retreat in energy prices is expected to effectively alleviate global inflationary pressures. The cooling of market inflation expectations has reduced the perceived necessity for the Federal Reserve to maintain high interest rates for an extended period, with the probability of a December rate hike slightly declining, thereby supporting the gold price rebound. Looking ahead, while gold is currently rebounding, it has not yet escaped the overall downside risk. Apart from potential uncertainties before any formal US-Iran peace agreement is signed, market expectations for the Federal Reserve's monetary policy tightening continue to limit the upside potential.
Technical Analysis Perspective
On the daily chart, gold has rebounded from a six-month low, hitting a one-week high and alleviating short-term downside pressure. For support, focus on the key $4,300 level, where the price stabilized after Monday's rally met resistance and continued higher. The next support level to watch is $4,280, the low point after Monday's gap higher open, where the price stabilized multiple times before rising. For resistance, monitor Monday's high of $4,369, which is also near the May low of $4,366. After gold broke below this level in early June, it accelerated its decline. The next resistance is the key $4,400 level. The 5-day moving average and the MACD indicator are showing signs of a bullish turn from a bearish crossover, while the KDJ and RSI indicators are in bullish crossovers, suggesting the possibility of a continued short-term rebound.
Intraday Gold Outlook
The potential US-Iran peace deal has pressured oil prices lower and cooled inflation expectations, providing significant support for the gold price rebound. However, market expectations for the Federal Reserve's monetary policy tightening continue to limit upside potential. A range-trading approach is suggested. For support, focus on $4,300 and $4,280. For resistance, watch $4,369 and $4,400.
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