April 27: In the gold market last week, international gold prices encountered resistance, retreated, and closed lower, erasing the gains from the previous week. Fluctuating geopolitical tensions, particularly the escalating contest for control of the Strait of Hormuz between the US and Iran, bolstered crude oil and the US dollar this week, putting pressure on gold. This kept prices subdued below the 10-week moving average resistance. The weekly chart also formed a bearish engulfing pattern, suggesting a potential peak and indicating risks of a further pullback and decline. Therefore, until a close above $4900 is achieved, the outlook remains biased towards a weak and consolidative adjustment.
In terms of specific price action, gold opened lower at $4791.69 per ounce at the week's start and trended downwards overall. After touching a weekly high of $4832.45 on Tuesday, prices plunged and continued falling, recording a weekly low of $4657.85 on Friday before finding some support and rebounding slightly. The week ultimately closed at $4707.29. Compared to the previous week's close of $4835.08, this represented a weekly range of $177.23, a decline of $127.79, or 2.64%.
Looking ahead to Monday, April 27, international gold opened lower again and weakened. This was due to stalled US-Iran peace talks over the weekend, combined with continued limited oil transit volumes through the Strait of Hormuz, sustaining tight global oil supplies. These factors are fueling inflation concerns, diminishing expectations for Federal Reserve interest rate cuts, and consequently weighing on gold prices.
However, considering the overall situation, the most likely final outcome remains an agreement; it is now primarily a matter of timing. Iran has indicated its current focus is on finding solutions to ensure safe passage through the Strait of Hormuz and has proposed a three-stage negotiation plan. Ultimately, even conflict typically aims to achieve some form of agreement. Based on market and institutional expectations, a return to normal export levels through the Strait of Hormuz is anticipated by late June or potentially later. Consequently, a more robust and sustained strengthening of gold prices may be deferred until the second half of the year.
Fundamentally, the bullish crude oil outlook driven by current geopolitical risks is stoking market concerns about inflation. This, in turn, is dampening prospects for Fed rate cuts, which continues to constrain gold's upside potential and keeps the metal in an adjustment phase. Therefore, until the geopolitical landscape shifts decisively, gold prices are expected to remain in this state.
In the short term, a full reopening of the Strait of Hormuz would likely cause a brief price spike, similar to previous patterns. However, for a more sustained move higher and a return above the $5000 mark, a conclusive end to the US-Iran tensions or the signing of a long-term ceasefire agreement would be necessary. To challenge historical highs again, resolution of the nuclear issue would be required to prevent recurring geopolitical risks, alongside a return of Fed rate cut expectations. Gold would need to reassume its role as a safe-haven asset, supported by central bank buying, within a monetary easing cycle.
The absence of positive developments in any one of these three factors warrants caution regarding the risk of a pullback following any rally.
Nevertheless, in Zhang Yaoxi's view, there is a high probability that all three factors will eventually shift to favor gold. Thus, over the next year or so, new record highs are still anticipated. This is because short-term geopolitical fluctuations have not undermined gold's core bullish drivers, which include the reshaping of the global geopolitical order, risks associated with uncontrolled US debt, central bank gold purchases, anticipated Fed rate cuts, and a scarcity of reliable safe-haven assets. These elements are classic catalysts for a long-term gold bull market.
Even if a US-Iran agreement ultimately fails and Strait transit is severely disrupted, the resulting tension in European energy markets would be unlikely to derail gold's bullish prospects. Rising inflation would also lead to higher commodity prices, boosting gold due to its inherent properties as an inflation hedge and a commodity itself.
Furthermore, historical patterns show that during periods of escalating conflict or energy supply disruptions, investors often turn to gold to hedge against uncertainty. Consequently, by the end of this year, gold prices still have the potential to challenge levels above $6000, while silver could target prices above $150.
Technically, on a monthly chart, gold's March close above the ascending trendline maintains the bullish outlook. The current month's opening price also remains within this upward trajectory. As long as future closes do not fall below this trendline support, the potential for new highs remains intact.
On the weekly chart, last week's decline and close keep prices below the 10-week moving average, suggesting a risk of further adjustment or a pullback towards support around $4550 or lower. Conversely, a rebound and break above the 10-week MA resistance would strengthen the case for revisiting record highs.
On the daily chart, gold continues to trade below both the 60-day and 100-day moving averages, indicating increased bearish momentum in the near term. This also suggests a potential for further decline towards support at the 144-day MA and even a risk of retesting the 200-day MA support.
Resistance above is seen at the 100-day MA pressure point and the key 60-day MA resistance. A breakout above these levels could pave the way for a move towards the $5000 mark, significantly increasing the likelihood of new highs. Until such a breakout occurs, the expectation is for continued weak and choppy trading, with a focus on potential support targets.
For specific intraday trading guidance, refer to real-time account information. Preliminary intraday trading levels for reference are as follows. Final entry and exit points should be confirmed based on real-time account notifications.
Gold: Support to watch is around $4640 or $4550; resistance is around $4720 or $4750. Silver: Support to watch is around $73.80 or $72.70; resistance is around $76.00 or $77.20.
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