In Monday's Asian trading session, the international gold price experienced a dip followed by a rebound. Spot gold (XAU/USD) fell back near $4,150 before quickly recovering to around $4,200. Following the earlier cooling of safe-haven sentiment due to the US-Iran agreement, markets had anticipated a potential further correction in gold. However, renewed uncertainty in the Middle East over the weekend has acted to limit the extent of gold's decline.
Over the weekend, former US President Trump stated that if armed groups in Lebanon continue attacks against Israel, the US might adopt more forceful measures, including new military strikes against Iran. These remarks have introduced fresh concerns regarding the prospects for US-Iran peace negotiations.
Simultaneously, Iranian negotiators temporarily paused important talks in Switzerland in response to the US's firm stance. However, communication channels have not been completely severed, and negotiations are still progressing. The market views that, despite a short-term increase in diplomatic friction, the risk of either side fully withdrawing from talks remains limited for now. The resurgence in safe-haven demand provided some support for gold, but market focus quickly shifted back to US monetary policy outlook. With new Federal Reserve Chair Kevin Warsh consistently signaling a hawkish stance, investor expectations for interest rate cuts this year have further diminished, supporting a strong US dollar index.
Market expectations for Fed rate cuts in 2024 have significantly decreased, keeping the US dollar index elevated and applying sustained pressure on gold. Analysts note that gold, as a non-yielding asset, is particularly sensitive to changes in the interest rate environment. When markets anticipate high rates will persist for longer, the appeal of holding gold is often diminished.
Concurrently, a stronger US dollar is eroding gold's traditional safe-haven advantage. Tim Waterer, Chief Market Analyst at KCM Trade, stated that the previous gold rally triggered by the US-Iran interim agreement was short-lived, with focus returning to the dollar. The Fed's hawkish stance is currently dominating market trading logic.
Regarding institutional views, Goldman Sachs has recently revised its gold price forecast. The firm now expects international gold prices to reach around $4,900 per ounce by December this year, a notable reduction from its previous target of $5,400. Goldman Sachs cites the resilience of the US economy and the potential for interest rates to remain high for longer than previously expected as key reasons for lowering its gold price target.
From a broader market perspective, gold is currently being influenced by two opposing forces: safe-haven demand and interest rate expectations. Geopolitical risks provide underlying support, while a strong dollar and high-rate environment cap its upside, leading gold into a phase of high-level consolidation. Future market focus will be on the progress of US-Iran talks, speeches from Federal Reserve officials, and upcoming inflation and employment data. If the US dollar maintains its strength, gold may face further near-term consolidation pressure. Conversely, a significant escalation in the Middle East that reignites safe-haven demand could attract renewed capital flows into the precious metals market.
Observing the daily chart structure, spot gold, after correcting from highs above $4,500, remains in a phase of corrective consolidation. Although recent geopolitical risks have spurred a temporary rebound, prices have failed to achieve a decisive breakout, indicating persistent selling pressure above. Currently, gold is trading around $4,150, with short-term moving averages beginning to flatten, suggesting a tug-of-war between bulls and bears. Key resistance levels to watch are the $4,250 and $4,300 zones. If these levels are not convincingly breached, gold may face the possibility of further retreats to test support around $4,100 or even $4,050. Overall, the medium-term corrective structure is not yet complete, and a weak, consolidative pattern remains in place.
From a 4-hour chart perspective, gold's rebound momentum has weakened, with the price center showing signs of a slow downward drift. Recent attempts to break above the $4,200 level have been unsuccessful, indicating a lack of strong follow-through buying interest. In the short term, dollar strength and elevated US Treasury yields continue to weigh on gold's performance. A subsequent break below the support near $4,120 could lead to a test of the $4,100 level. Conversely, only a sustained move back above $4,200 would potentially reopen the path for a rebound. Currently, the 4-hour chart shows the metal is still in a high-level consolidation phase, with near-term momentum leaning towards corrective movement.
Market Summary
The gold market is currently in a phase of tug-of-war between safe-haven demand and monetary policy expectations. Uncertainty in the Middle East provides some support, but the Federal Reserve's hawkish stance and a strong US dollar are undermining gold's appeal. Market pricing shows investors are continuously adjusting their expectations for rate cuts this year, placing some pressure on the precious metals sector. In the near term, if US-Iran negotiations continue, safe-haven premiums could recede further. However, a renewed escalation in geopolitical tensions could provide fresh upward momentum for gold. Overall, gold is likely to maintain a high-level, range-bound consolidation pattern in the short term. Until key resistance levels are breached, the market should remain cautious of adjustment risks.
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