Geopolitical sentiment premium declines, gold remains in range-bound fluctuations, awaiting recovery

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Source: Huizhou Finance

Gold prices continued their rebound during the European session, briefly touching a high near $4465, recovering part of the previous trading day’s losses. This rebound was mainly driven by a decline in the U.S. dollar index. According to market surveys, the U.S. has delayed potential strikes on Middle Eastern energy facilities and extended the negotiation deadline, easing market concerns over escalating conflicts, thus weakening the dollar’s safe-haven demand and providing short-term support for gold.

However, from an overall perspective, the upward momentum for gold remains insufficient. Although geopolitical risks have not completely dissipated, the market is more focused on their implications for energy prices and inflation. With oil prices remaining high, inflation expectations have rekindled, leading to a significant shift in market perceptions regarding the policy paths of major central banks. It is currently widely anticipated that major central banks, including the Federal Reserve, will maintain a hawkish stance, with the possibility of further interest rate hikes not being ruled out.

This shift in expectations has directly pushed U.S. Treasury yields to remain high, thereby exerting pressure on non-yielding assets like gold. In a high-interest-rate environment, the opportunity cost of holding gold increases, causing funds to flow towards yield-generating assets, making it difficult for gold prices to establish a sustained upward trend.

Moreover, repeated news surrounding the situation in the Middle East has exacerbated market uncertainty. On one hand, the U.S. has signaled a de-escalation; on the other hand, related countries deny any progress in negotiations, while military deployments continue. This uncertainty, while providing some support for safe-haven demand, has not translated into sustained buying, instead making market sentiment more cautious.

From a technical perspective, the daily chart of gold shows clear signs of weakening. Previously, prices broke below the critical 100-day moving average, and this week’s rebound was halted near that average, confirming the level as significant resistance. The current 100-day moving average is around $4630, which is a key barrier that short-term bulls need to break through. From a trend structure standpoint, prices have shifted from an upward trend to a sideways bearish trend, with the moving average system beginning to flatten and slightly slope downward.

In terms of momentum indicators, the MACD continues to operate below the zero line, with the fast line below the slow line, indicating that bearish momentum remains dominant; although the RSI has rebounded from the oversold region, it is still in the low range around 30, reflecting weak market demand, with the rebound being more of a corrective nature. If prices cannot stabilize above the key moving averages, the bearish structure is unlikely to change.

From the 4-hour chart, gold is showing a short-term rebound and corrective pattern, but upward momentum is clearly lacking. After touching above $4460, prices have shown signs of stagnation, indicating strong selling pressure above. Although short-term moving averages show signs of turning up, they have not yet formed an effective bullish arrangement. The MACD momentum bars briefly turned positive before quickly converging, indicating a lack of sustainability in the rebound; the RSI has risen to the neutral zone but has not entered the strong territory, suggesting limited bullish momentum.

In terms of key technical levels, initial resistance above is at $4630, with further resistance at the $4820 and $5000 regions; support below is at $4380, and if broken, could lead to further declines to the $4120 area. Overall, while there is a short-term rebound, the structure remains bearish, and caution is warranted regarding the risk of pullbacks after highs.

Editor’s Summary:

The current gold market is in a typical phase of “safe-haven support versus interest rate suppression.” Although geopolitical situations provide bottom support for gold prices, inflation expectations and the upward trend in interest rates significantly weaken its upside potential. From a technical structure perspective, gold has not yet escaped downward pressure, and the rebound is more of a temporary correction. In the short term, a weak sideways structure is expected to persist, while the mid-term trend still needs to pay attention to changes in interest rate expectations and the direction of the dollar.

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Editor: Zhu Henan