Gold prices maintained a weak consolidation pattern ahead of the European session. Although the metal had retreated from a three-week high, it managed to hold above the $4,700 level. Overall, the market is currently in a typical phase of tug-of-war between bullish and bearish forces, with no clear directional bias emerging yet.
From a fundamental perspective, uncertainty in the Middle East continues to influence market sentiment. Israel conducted large-scale airstrikes in Lebanon and explicitly stated that the relevant ceasefire arrangements do not cover Lebanese territory. This development casts doubt on the stability of the temporary ceasefire agreement previously reached between the US and Iran. Simultaneously, Iran has once again closed shipping routes through the Strait of Hormuz and warned that it may withdraw from the ceasefire agreement if the conflict persists. This series of events has dampened market expectations for a de-escalation of tensions.
Against this backdrop, the US dollar has garnered some safe-haven support, thereby putting pressure on gold. Typically, a stronger US dollar diminishes the appeal of dollar-denominated gold, weighing on its price. Consequently, although geopolitical risks are inherently positive for gold, their supportive effect on the dollar is, in the short term, having a negative impact on the gold price.
From a monetary policy standpoint, the Federal Reserve's stance remains a significant factor influencing gold. The latest meeting minutes indicated that the Fed is inclined to maintain interest rates at elevated levels to counter inflation risks stemming from rising energy prices. This expectation of "higher for longer" interest rates continues to suppress gold, as the non-yielding asset becomes less attractive in a high-interest-rate environment.
However, from a medium-term view, policymakers have still hinted at potential room for future rate cuts, suggesting one possible cut within the year and further adjustments over a longer horizon. This expectation limits the upside for the US dollar and provides some underlying support for gold, preventing a trend-driven decline.
In terms of market behavior, investors are generally adopting a cautious stance ahead of key data releases. The market is awaiting the upcoming US PCE price index and Friday's CPI data. Expectations suggest that US inflation levels may continue to rise, which will significantly influence the Fed's policy path. Therefore, until this data is released, capital is tending to avoid strong directional bets.
Technically, the daily chart structure shows that gold has entered a consolidation phase after retreating from its highs, with the overall trend remaining within a high-level oscillation range. The $4,700 level currently constitutes a key short-term support; a decisive break below this level could trigger further downside movement. On the upside, resistance is noted near $4,758, which is a key retracement level.
On the 4-hour chart, the price is trading below the 200-period moving average and is also constrained by the 50% Fibonacci retracement level, suggesting a bearish-leaning structure. The MACD indicator has moved into negative territory, indicating weakened short-term momentum, while the RSI hovers near neutral, suggesting a lack of strong bullish momentum without a full bearish turn. If the price fails to re-establish a firm footing above $4,750, any rebounds are likely to be technical corrections.
For downside support, the $4,600 area is a crucial short-term zone. Further support levels to watch are $4,410 and $4,100, which correspond to previous low areas. For upside resistance, beyond $4,758, further focus lies on the $4,895–$4,914 range and the psychological $5,000 barrier.
In summary, the current gold trend is characterized by a typical pattern of high-level volatility and a battle between bulls and bears. In the short term, fluctuating Middle East tensions and safe-haven demand for the US dollar are weighing on gold prices, while the Fed's high-rate expectations further dampen upward momentum. However, from a medium-term perspective, potential rate cut expectations continue to provide a floor for gold. With key inflation data pending, the market lacks a clear direction, making it likely for gold to maintain its range-bound consolidation. Future price action will depend on the performance of inflation data and subsequent shifts in policy expectations.
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