The gold market last week saw international gold prices initially decline as some investors used price rebounds to reduce positions. This was compounded by comments from Federal Reserve Governor Waller indicating that inflation risks now outweigh employment risks. Additionally, tensions between the US and Iran flared up again less than three weeks after a ceasefire, with the US launching strikes on Iran and revoking oil sanctions waivers, significantly escalating actions and jeopardizing the peace agreement. This sparked concerns that a resumption of conflict could reignite inflation and push interest rates higher, putting downward pressure on gold prices.
Subsequently, remarks from former President Trump suggesting the situation would end quickly, along with Pakistan engaging with Iran to ease tensions, helped gold prices rebound from their lows. However, the rally was capped on Friday as Iran stated it had never requested negotiations with the US and denied reports of talks scheduled for the following week, leading gold to close the week lower.
The consecutive sessions of finding a bottom and rebounding, however, suggest the potential for a significant corrective rally in the future. The outlook remains for prices to consolidate and build a base, supported by the ascending trend channel support line established since 2023, before resuming an upward trajectory.
In terms of specific price action, gold opened the week at $4,181.11 per ounce, reaching a weekly high of $4,202.31 before encountering resistance and falling consecutively. It hit a weekly low of $4,021.72 on Wednesday, from which it bottomed and rebounded. Prices strengthened on Thursday but faced resistance and consolidated on Friday, closing the week at $4,111.62. The weekly trading range was $180.59, with a net loss of $69.49, or 1.67%.
Looking at the start of this week, Monday, July 13th, international gold opened lower in the Asian session, down $25 to $4,086.51 per ounce, and initially trended lower. This was due to Iran announcing the closure of the Strait of Hormuz over the weekend and the US conducting two strikes on Iran in the early hours, reigniting geopolitical escalation. This boosted WTI crude oil, which opened sharply higher, gaining over 3%, thereby lifting inflation expectations and prospects for interest rate hikes, which weighed on gold.
Consequently, in the short to medium term, gold prices still face adjustment pressure. Until the US-Iran situation is fully resolved, any rebounds in gold are likely to be temporary or unsustainable. Operationally, given the unpredictable and fluctuating nature of various factors, traders should focus on capturing intraday or weekly tactical opportunities for both long and short positions.
From a fundamental perspective, analysis indicates that since the beginning of the year, gold has faced selling pressure due to profit-taking at high levels. During the Middle East conflict, a stronger US dollar, high real yields, and rebounding inflation fueling expectations of sustained Fed rate hikes led to weakness in both short-term tactical and long-term strategic investment demand, resulting in continuous selling of gold assets.
Although the pace of selling has recently slowed amid eased geopolitical tensions, weaker US economic data, lower oil prices, and declining inflation expectations, some investors are still using price rebounds to reduce positions during recovery phases. Sustained bullish conviction is not strong. The Federal Reserve's maintained tight monetary policy and persistently rising real interest rates continue to offset gold's upward momentum. The overall trend remains one of stabilization and repair.
Furthermore, the recent re-escalation of geopolitical tensions, shifting away from the previous缓和局面, continues to keep gold under adjustment pressure.
Looking ahead, the direction of gold prices will continue to hinge on the interplay between Middle East geopolitical developments and Federal Reserve monetary policy. Key factors to watch include interest rate expectations, whether US Treasury yields and the dollar enter a definitive downtrend, or waiting for bearish factors to be fully exhausted, allowing time to turn into bullish momentum.
If Middle East tensions continue to escalate and drive oil prices to remain elevated for an extended period, gold may face further adjustment pressure or prolonged sideways consolidation. Conversely, if the ceasefire agreement is solidified or negotiations show positive progress, safe-haven demand could regain dominance, potentially driving a sustained gold price rebound.
Regardless, while rising real interest rates and increased opportunity costs of holding gold in the short to medium term may cap its upside, from a longer-term perspective of one year or more, gold's fundamental support remains robust. The Chinese central bank's continued strategic gold purchases, deeper integration between the Hong Kong and mainland gold markets, the global trend towards reserve asset diversification, and the ongoing global de-dollarization trend all provide solid long-term underpinning for gold prices. In the current complex geopolitical and macroeconomic environment, gold's value as a hedge against inflation, currency volatility, and uncertainty risks has not diminished. Gold at current levels still holds asset allocation value and demand.
On the technical front, at the monthly chart level, gold formed a solid bearish candlestick in June, indicating sustained selling pressure and suggesting the potential for a further decline in July towards the support of the Bollinger Band middle line around $3,820, or even lower. Although there are signs of stabilization currently, prices remain under the downward pressure from June's decline and have not reclaimed the position above the ascending trendline. Therefore, until June's losses are recovered, the risk of a renewed downturn remains. The bias is for prices to potentially trade sideways within a range of $4,500 to $3,600 for several months before resuming an upward climb.
At the weekly chart level, gold has now formed a bottoming and rebounding candlestick pattern for three consecutive weeks, suggesting the potential for a sustained rebound ahead. However, bullish momentum has not strengthened significantly, and the price action has failed to rebound and stabilize above the 60-week moving average. Until it closes above this level, gold will either continue the recent weeks' range-bound consolidation or decline again to test levels around $3,950 or $3,700.
On the daily chart, gold's lower open and decline, trading below the middle Bollinger Band and short-term moving averages, indicates bearish dominance. The near-term bias is for further declines. Operationally, focus on selling near moving average resistance. On the downside, watch for support levels on shorter timeframes like the 4-hour or 1-hour charts for potential long entries.
Preliminary intraday trading levels for reference (specific entry/exit points should be based on real-time guidance):
Gold: Watch for support around $4,060 or $4,020; Resistance around $4,100 or $4,112.
Silver: Watch for support around $57.50 or $56.80; Resistance around $59.90 or $60.80.
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