On Thursday, July 24th, the analysis highlighted that escalating tensions in the Middle East were fueling a sustained rise in oil prices, pushing them to a one-month high. This intensified concerns about high inflation, strengthening expectations for a Federal Reserve rate hike. The anticipation of higher rates supported the U.S. dollar, which climbed to a three-week peak, thereby pressuring gold prices. Short-term technical indicators also suggested that gold, after a period of consecutive rebounds, faced resistance and needed a correction. Therefore, the recommended trading strategy was to focus on resistance levels at $4100, followed by $4140, with support levels at $4070 and then $4040.
Looking at the subsequent price action, gold maintained a pressured, consolidative trend before the U.S. trading session on Thursday. After the U.S. market opened, gold broke through the support near $4770, falling to $4040 where it found a footing. It rebounded to $4067 before facing resistance and pulling back to test the $4040 support level again. After another bounce to $4060 that was met with resistance, the price repeatedly fell back to $4040, where it stabilized. The metal is currently trading around $4048. Overall, gold's rebound encountered resistance, leading to a short-term correction. After losing the $4070 support, it found a floor at the $4040 level, aligning closely with our expectations.
A senior analyst at Wolfinance noted that Thursday's decline ended gold's four-day winning streak. This was primarily due to the escalation of military conflict between the U.S. and Iran, which sustained the rally in oil prices, pushing them to a one-month high. The rise in energy prices exacerbated market fears of inflation. Previous declines in U.S. CPI and PPI data, driven by lower energy costs, now face the risk of rising again. This has led a growing number of investors to bet that the Federal Reserve will raise interest rates this year. The expectation of higher interest rates has kept the U.S. dollar strong, pushing it to a three-week high, directly pressuring gold prices. Looking ahead, if tensions in the Middle East escalate further, the Strait remains closed, and oil prices hit new highs, the expectation of high inflation could further strengthen the case for a Fed rate hike, potentially continuing to weigh on gold.
On the daily chart, gold's upward momentum has stalled, ending its four-day winning streak and entering a short-term correction. For support, focus on Thursday's low of $4040. The price repeatedly fell to this level and stabilized, which also marks Monday's high point – a level broken this week during the rally. Further support lies at the $4000 psychological level, which also coincides with the lower band of the 4-hour Bollinger Bands. For resistance, watch the daily chart's middle Bollinger Band at $4070. After breaking below this level on Thursday, the price attempted a rebound to here but faced selling pressure. The next resistance is the $4100 psychological level. The 5-day moving average shows a weak bullish crossover, the MACD indicator's bullish momentum is slowing, and the KDJ and RSI indicators have turned downward from a bullish position, remaining in the lower half of the neutral zone. This short-term technical picture suggests that after encountering resistance in its rebound, gold requires a correction.
Reference for gold trading today: Ongoing tensions in the Middle East continue to drive oil prices higher, fueling market concerns about inflation and strengthening expectations for a Federal Reserve rate hike. This supports a stronger U.S. dollar, which directly pressures gold prices. A range-bound trading approach is recommended, focusing on resistance levels at $4070 and $4100, and support levels at $4040 and $4000.
Disclaimer: This content is for reference only and does not constitute investment advice. Investors who act on this information do so at their own risk.
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