On Thursday, August 7, we noted that the easing of tensions in the Middle East and the drop in oil prices have reduced concerns about high inflation, which dampens expectations for a Federal Reserve interest rate hike. This supports a rise in gold prices, and the short-term technical picture also indicates that gold's upward trend has begun, with potential for further gains. Therefore, we recommended focusing on support at $4,246, followed by $4,220, and resistance at $4,300, with a breakout potentially targeting $4,400.
In the subsequent trading session, during Thursday's European session, gold rebounded to $4,273 before meeting resistance, then pulled back to stabilize at $4,253. After the US market opened, gold rallied to $4,270, faced resistance, and fell to $4,230 before stabilizing. It then bounced back to $4,275, encountered resistance again, and settled at $4,223. On Friday, gold opened with a volatile uptrend, breaking through the key $4,300 level to reach a fresh one-and-a-half-month high of $4,320, currently trading near $4,312. Overall, gold experienced several highs and lows on Thursday, but after stabilizing, the price surged again on Friday, aligning with our expectation that the upward trend had commenced and further gains were possible.
Analysts at Wolfinance believe that the relaxation of Middle East tensions, the overall decline in oil prices, and the resulting reduction in inflationary pressures, which weakens expectations for a Fed rate hike, have been the key drivers behind gold's rise this week. Specifically, Trump's remarks over the weekend about canceling a military strike on Iran led to a sharp drop in oil prices on Monday, with gold opening higher. Although Iran denied this, the US did not launch a large-scale military strike, and Trump repeatedly stated that negotiations with Iran were ongoing. Despite Iran's denials, gold began to stabilize and inch higher. Subsequently, positive signals from Qatar and US officials indicated progress in mediation efforts to end the conflict and reopen the Strait of Hormuz. Iran also stated that an agreement with Oman on the Strait's passage was close to being finalized. This supported a significant rally in gold on Wednesday. However, on Thursday, Iranian media reported that Iran was drafting a preliminary bill to ban ships from hostile countries, including the US and Israel, from passing through the Strait of Hormuz, which caused oil prices to surge and gold to retreat from its highs. Nonetheless, expectations of US-Iran detente and cooling expectations for a September Fed rate hike weighed on the US dollar, once again supporting gold's rise on Friday.
On the daily chart, gold's strong rally today continues the week's upward trend, with a robust short-term performance. Regarding support, the $4,300 level is a key area, as gold encountered resistance there on Thursday before pulling back. The next support is at the daily Bollinger Band upper line, around $4,280. For resistance, the current intraday high of $4,320 is a key level to watch. A further breakout could target the weekly Bollinger Band middle line at $4,400. The daily Bollinger Bands are expanding, with the middle line trending upward, and short-term moving averages maintain a bullish alignment. The MACD indicator is forming a golden cross, and the KDJ and RSI indicators are also bullish, indicating that the bulls are in a favorable position with potential for further gains.
Gold's intraday reference: Expectations of US-Iran rapprochement are reducing inflation concerns and dampening rate hike expectations, continuing to support gold prices. The recommended approach is to treat the market with a range-bound mindset, with support at $4,300 and $4,280, and resistance at $4,320. If the price breaks higher, the next target is $4,400.
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