Spot gold saw a modest recovery in early Asian trading on Monday, June 22, currently up 0.5% and trading near $4,180.
The gold market opened high last week at $4,268, experienced a strong rally to a weekly high of $4,382, then saw a sharp pullback, finishing Friday's session with a weekly low around $4,121 before consolidating.
The week ultimately closed at $4,155, forming a long upper-shadow bearish candlestick on the weekly chart.
Key Market Drivers
Regarding Middle East tensions and US-Iran negotiations, Iran has stated that a draft for sanctions exemptions on its oil has been finalized.
US Vice President Vance noted that talks have made "significant" progress with more expected, but cautioned that the negotiations "will not resolve all differences."
During this period, former President Trump threatened Iran to restrain Hezbollah or face renewed strikes, leading the Iranian delegation to refuse to return to the negotiating table.
Despite this, mediation efforts by Qatar and Pakistan continue, with messages being passed between Iran and the US through intermediaries, though a final outcome has not yet been achieved.
Oil prices closed higher on Friday, with Brent crude rising 1.1% to $79.94 per barrel and US crude up 1.3% to $76.43.
However, both still posted a weekly loss of approximately 8%, marking the largest weekly decline in recent times.
The US dollar index climbed about 1% last week to a 13-month high, briefly surpassing 101, supported by hawkish signals from the Federal Reserve meeting where 9 out of 19 policymakers projected a rate hike before year-end.
The yield on the 10-year US Treasury note rose to the 4.45%-4.60% range.
For gold, a non-yielding asset, this significant rise in the opportunity cost of holding it represents the most direct negative pressure.
Technical Perspective
Looking at the daily chart structure for gold, the metal may initially undergo consolidation at the start of this week, likely facing resistance below the 5 and 10-day moving averages around $4,220-30.
Support below will continue to be monitored around last week's low of $4,120/00, with a potential retreat towards the lower boundary of the daily range near $4,060, and further towards the trendline and previous low around $4,000.
However, this week could also bring surprises, which remain tied to the risk of sudden developments related to the US-Iran situation, necessitating continued high vigilance.
Analyzing the one-hour gold chart, the metal halted its decline and rebounded after a continuous sell-off on Friday.
While the momentum remains weak, this action was necessary.
Today's strength is driven by news flow, but the price stalled near $4,220, which was the first low point following last week's Fed rate decision.
Therefore, intraday focus remains on the $4,220/30 resistance zone, with initial support watched around $4,160, and major support still seen at $4,120/00.
It is highly probable that early-week trading will oscillate within this range.
As for the subsequent direction, a continued downward adjustment is the more likely scenario, but the US-Iran situation could introduce disruptions at any time.
Trading Strategy for Today
For short positions, consider entering lightly if the price rebounds again to $4,220/30, with a manual stop-loss set above $4,240 initially.
Targets are set around $4,170/60 for partial profit-taking and adjusting the stop-loss to breakeven, with remaining positions targeting a test of $4,120/00.
For long positions, if the price retraces to around $4,160, a tentative entry can be considered, with a light additional position added around $4,140/30.
Use a unified stop-loss at $4,120, with the profit target limited to the $4,200/20 area for exit.
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