Gold market activity for the week ending June 15th saw international gold prices rebound from their lows to close with a bearish candlestick, failing to break below the support of the 60-week moving average. However, the resulting price pattern suggests the potential for a renewed staged rebound in the near term.
The price action was influenced by several factors. Early in the week, a robust US non-farm payrolls report heightened expectations for interest rate hikes. Concurrently, tensions between the US and Iran escalated with a hardline stance in negotiations, US airstrikes on Iran over two consecutive days, and Iran's closure of the Strait of Hormuz. Additionally, US CPI data for May hit a three-year high, further fueling expectations for a Federal Reserve rate hike, which drove prices to a new low since March.
Ultimately, prices found a floor and rebounded after former President Trump called off military strikes and suggested a US-Iran agreement could be signed in Europe over the weekend.
In terms of specific price movements, gold opened the week at $4,328.81 per ounce, briefly hitting a weekly high of $4,362.98 before encountering resistance and trending lower. The price touched a weekly low of $4,023.87 on Thursday before staging a significant rebound to recover most of the losses. Trading was steady within a narrow range on Friday, with the week closing at $4,213.70. This represented a weekly range of $339.11, a closing decline of $115.11, or 2.66%.
Looking at the current week, starting Monday, June 15th, international gold opened sharply higher by over $60 at $4,275.60 per ounce, showing strength. This move was driven by news that Pakistan announced, following intensive negotiations, the US and Iran had reached a peace agreement. Both sides declared an immediate and permanent cessation of military actions on all fronts, including operations in Lebanon. The news of a formal signing ceremony scheduled for June 19th in Switzerland weighed on oil prices, which opened 4% lower, and pressured the US Dollar Index down 0.3%, thereby boosting gold prices.
Furthermore, Iran's Supreme National Security Council issued a statement early that morning formally confirming the agreement on a US-Iran ceasefire memorandum of understanding. Trump subsequently stated that an Iran deal had been reached, the Strait would be opened, and the blockade lifted. In the short term, gold prices are expected to remain relatively strong based on this development.
However, the gap created by the higher open is likely to be filled. The formal signing of the memorandum of understanding is set for this Friday in Switzerland, meaning risks of changes remain during this period. Even if signed, a subsequent 60-day negotiation period on nuclear issues will commence.
Iran's Deputy Foreign Minister also noted that the memorandum does not imply trust in the "enemy," with final agreement negotiations to occur within 60 days, and that Iran would take its own measures if the other side violated the agreement. Therefore, until a final outcome is determined, any strength in gold prices should be viewed primarily as a staged rebound.
Nevertheless, it is understood that the ultimate resolution of the geopolitical situation will involve a ceasefire and long-term peace, which is now largely a matter of timing. For inflation, this development would likely support a weakening of expectations for Federal Reserve rate hikes. Consequently, gold prices in the second half of the year are still inclined to shift towards a stronger trend.
From a technical perspective, on the monthly chart, although prices have recovered somewhat, the monthly candle is not yet closed. The overall trend remains below the resistance of the 5- and 10-month moving averages and the ascending trendline. The accompanying KD indicator continues to signal bearish momentum, and the MACD is poised to form a bearish crossover, indicating bears still hold the advantage. This suggests the potential for a further decline towards the support of the middle Bollinger Band around $3,800, or even the support of the 30-month moving average near $3,300.
If the price fails to rebound and close above $4,500 this month or next, the outlook remains for further downward adjustment.
On the weekly chart, last week's price action formed a bullish hammer-like reversal pattern. Compared to the previous two instances of similar bottoming patterns, this suggests the coming weeks may see a staged rebound, with potential targets at $4,500 or $4,700. However, a renewed decline closing below the support of the 60-week moving average would open the door for a further drop towards $3,800 or $3,600.
On the daily chart, gold currently exhibits a bullish engulfing pattern indicating a potential halt to the decline, with short-term momentum leaning positive, as evidenced by today's gap higher open. However, significant resistance remains from the 200-day and 60-day moving averages above. There is also a risk of the gap being filled. If the bearish alignment of moving averages and the prospect of a bearish crossover cannot be reversed, the medium-term outlook will likely remain biased towards weak consolidation and further declines.
Intraday operational reference levels are provided below. Specific entry and exit points should be based on real-time account notifications.
Gold: Support levels to watch are near $4,210 or $4,140; Resistance levels to watch are near $4,335 or $4,385.
Silver: Support levels to watch are near $68.75 or $67.55; Resistance levels to watch are near $71.25 or $72.45.
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