On Tuesday, June 9, during the early Asian trading session, spot gold initially declined before rising, currently trading near the opening price of $4,330. The gold market opened at $4,329 yesterday, initially rallying to a high of $4,353 before experiencing a sharp pullback, briefly falling to a near two-and-a-half-month low around $4,268. However, it then remarkably recovered most of its losses, ultimately closing the day at $4,330. The daily candlestick formed a "Morning Star" pattern with a very long lower shadow.
Key Fundamental Drivers
Geopolitical tensions have been a factor. Iran and Israel have exchanged fire for the first time since April, while the Houthi forces launched missiles at Israel and announced a complete ban on Israeli navigation in the Red Sea. Israel's Defense Minister rejected Iran's threats, vowing continued confrontation with Hezbollah. Former U.S. President Trump urged Iran and Israel to cease mutual attacks, mentioning ongoing peace talks. Iran subsequently announced a temporary halt to its strikes on Israel, warning Israel not to attack Lebanon. Israeli Prime Minister Netanyahu also instructed the military to halt preparations for a new round of attacks on Iran. A senior Israeli official indicated that if the homeland is attacked, strikes on the southern suburbs of Beirut would follow. Iran's UN envoy expressed hope for a U.S.-Iran agreement to be reached by the end of June.
According to the CME FedWatch Tool, the probability of the Federal Reserve maintaining interest rates unchanged in June is 98.1%, with a cumulative probability of a 25 basis point cut at 1.9%. For July, the probability of unchanged rates is 84.7%, with a 13.6% chance of a cumulative 25 basis point hike and a 1.6% chance of a cumulative 25 basis point cut. By December, the probability of unchanged rates is 28.2%, with a 71.3% chance of at least one 25 basis point hike and a 0.5% chance of a cumulative 25 basis point cut.
Technical Perspective from Daily Chart
From a technical standpoint on the daily chart, yesterday's doji candlestick for gold indicates a need for technical consolidation after being oversold, as well as a digestion process following Friday's news-driven volatility. Structurally, the price is currently in a low position, showing signs of being oversold. Any subsequent rebound should, for now, be viewed as a technical oversold rebound, not a trend reversal. A short-term rebound and consolidation in gold may extend over the next 1-2 days, but this depends on the short-term consolidation rhythm of the U.S. dollar index. Resistance above can be monitored around the 5-day moving average near $4,380. Before that, pressure from the previous low around $4,365, now acting as resistance, may warrant more attention. If the U.S. dollar index corrects sharply in the short term, breaking below its 5-day moving average, then gold might correspondingly break above its own 5-day moving average and test the 10-day moving average and last Friday's breakdown area around $4,420-25. However, this scenario is considered low probability and would require bearish news pressure on the dollar.
Analysis of the Hourly Chart
Looking at the gold one-hour chart, the price rebounded during the European and American sessions yesterday, but the momentum remained relatively weak. The upper boundary of the hourly range near $4,350 once again formed short-term resistance, and the price returned to consolidation in the late session. This suggests gold is still struggling to reverse its weak trend, with any short-term bounce being merely a technical oversold rebound insufficient to change the broader downtrend. Based on the hourly structure, gold is expected to trade within a range today. Resistance above is focused around the range's upper boundary near $4,350, with the previous low around $4,365 serving as a key pressure level that may determine the short-term direction. Support below is initially monitored around $4,310-00. A break below could lead to a test of the range's lower boundary near $4,280.
Trading Strategy for the Day
Today's trading suggestion: Consider light short positions on a rebound to $4,350-55, adding lightly at $4,360-65. A unified stop-loss should be placed above $4,380. Initial targets are $4,330-20, where the stop-loss can be adjusted to breakeven. Further reduction or exit can be considered upon a retreat to the $4,300-2,900 area.
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