On Wednesday, analysts noted that the United States pausing military strikes on Iran and reopening negotiations sent a positive signal to the market. Renewed hopes for a diplomatic resolution to the conflict led to falling oil prices, which eased inflation concerns. This, in turn, dampened expectations for Federal Reserve interest rate hikes and provided support for a gold rebound. Short-term technical indicators also suggested further upside potential, with the possibility of a new uptrend beginning. As a result, it was recommended that support levels be monitored at $4,100 and $4,060, while resistance was seen at $4,180 and $4,200, with a breakout above these levels potentially opening the door for more gains.
Looking at subsequent price action, during Wednesday's European session, gold stabilized at $4,150 before recovering to test resistance at $4,213. After retreating to $4,183, it consolidated. During the US session, gold broke above the $4,180 to $4,200 resistance zone, surging to $4,267 before facing resistance. On Thursday, gold edged lower to $4,246, found support, and continued to climb, reaching a fresh daily high of $4,304. However, it repeatedly failed to hold above the key $4,300 level, pulling back to support at $4,247 before trading around $4,269.
In summary, gold's breakout to the upside and subsequent rally aligns with the view that a new uptrend is emerging and that short-term recovery is likely. A senior analyst at Wolfinance noted that Wednesday's sharp rally, which pushed gold to its highest level in over a month, was primarily driven by easing tensions in the Middle East.
Specifically, over the weekend, President Trump announced the cancellation of a planned strike on Iran, a claim later denied by Tehran. However, the US did not follow through with a large-scale military operation. While direct negotiations did not occur, both sides' negotiating teams continued existing discussions through mediators. US and Qatari officials signaled progress toward reopening the Strait of Hormuz, and mediation efforts to end the conflict made headway. Subsequently, an Iranian official indicated that an agreement with Oman on strait passage was nearly finalized. These developments eased Middle East tensions, pushed oil prices to a three-week low, and reduced market concerns about inflation. This, in turn, dampened expectations for Fed rate hikes, weighed on the US dollar, and provided a foundation for gold's rebound.
On the daily chart, gold's single-day surge broke through the past month's trading range, indicating strong short-term momentum. Key support levels include the daily low of $4,246, where the metal stabilized during the early Asian session, and the daily Bollinger Band upper limit near $4,220. On the upside, resistance is focused on the $4,300 psychological level. A sustained break above this level could target the $4,400 mark, which aligns with the weekly Bollinger Band mid-line. The daily Bollinger Bands are expanding, with the mid-line beginning to turn upward. Short-term moving averages are forming a bullish crossover, the MACD indicator is trending higher, and both the KDJ and RSI indicators are pointing upward. These signals suggest that gold's uptrend has started and that further gains are possible.
Gold trading reference: The easing of Middle East tensions has led to lower oil prices, reducing inflation concerns and dampening expectations for Fed rate hikes, which provides support for gold's advance. The recommended approach is to treat the market with a range-bound mindset. Key support levels are $4,246 and $4,220, while resistance is at $4,300. A sustained break above this level could open the door to $4,400.
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