Zhang Yaoxi: The US-Iran agreement is approaching the final ultimatum; gold prices are temporarily moving sideways with adjustments.

April 7: Last trading day on Monday (April 6): International gold fluctuated in a doji pattern and closed lower, with a flat trend. On one hand, strong non-farm payroll data last Friday provided a bullish signal, but geopolitical tensions and escalating situations pushed oil prices higher, putting pressure on gold prices. On the other hand, the number of ships passing through the Strait of Hormuz increased to the highest level since early March, weakening the upward momentum of oil prices, which kept gold still trading above the 10-day moving average. Additionally, the Bollinger Bands are narrowing, and the market’s reaction to escalating or easing geopolitical tensions is limited, indicating a short-term sideways trend with a bias toward consolidation. However, on the upside, I remain optimistic about further gains.

Regarding specific movements, gold opened in Asia at $4,667.68 per ounce, initially declined to a daily low of $4,600.66, then rebounded and continued until the European session at 17:30, reaching the daily high of $4,706.21. After encountering resistance, it retreated and oscillated weakly, continuing into the latter part of the US session, staying above $4,646 in a narrow range, and finally closing at $4,650.19. The daily range was $105.55, with a decline of $17.49, a 0.37% drop.

Looking ahead to Tuesday, April 7: International gold opened with a slight rebound and remained relatively strong. The increase in ship traffic through the Strait of Hormuz weakened oil bullish prospects and inflation expectations. Additionally, the US dollar index fell yesterday, showing a technical divergence that suggests a risk of a pullback, which would support gold prices. Therefore, in the short term, gold is expected to fluctuate with a bias toward strengthening.

Today’s focus will be on the US February durable goods orders month-over-month and the New York Fed’s March 1-year inflation expectations. Market expectations are slightly bullish for gold, especially if data beats forecasts or prior values, but overall, the trend is expected to remain sideways.

Furthermore, this week’s key event is the Federal Reserve meeting minutes at 02:00 on Thursday, which may reveal officials’ concerns about inflation and the potential economic impact of Iran conflicts and disruptions in energy and other commodity flows. On Friday at 20:30, US March CPI data will be released. Market expectations are that, due to rising gasoline prices driven by the Iran war, CPI will increase by about 1%, marking the largest monthly increase since 2022. Both factors are likely to weaken the prospects of Fed rate cuts and be bearish for gold. If geopolitical tensions persist this week and data aligns with expectations, but gold fails to recover last week’s gains and breaks below the 30-day moving average support, then bullish sentiment for gold will weaken, and bearish outlooks will diminish. Nonetheless, the overall upward trend remains, with potential for further gains.

Fundamentally, the market is awaiting further signals on US-Iran tensions before the “final deadline” on Wednesday morning, Beijing time, which is the last chance to reach an agreement. Iran has rejected a temporary ceasefire and emphasized the need for a permanent end to the war. Given Iran’s ten demands, an agreement seems unlikely, and tensions may escalate again, which would pressure gold prices downward. However, if the deadline passes without large-scale airstrikes or an agreement, the market may still interpret this as good news, leading to a rebound in gold prices. Attention should be paid to the actual market response after the deadline.

Additionally, US March services PPI surged to a new high since October 2022. Two Fed officials warned that inflation remains severe, implying they may tighten rather than loosen monetary policy. Wells Fargo and Citigroup have delayed expectations of Fed rate cuts. The bullish outlook for gold has weakened, and short-term consolidation or sideways movement is likely.

In the longer term, the dominant factors and key variables remain oil prices. The longer conflicts last, the more energy prices are likely to stay high, further boosting inflation and forcing the Fed to maintain current interest rates, making rate cuts unlikely. This will limit gold’s upside potential. However, if oil prices weaken, gold prices could strengthen.

Therefore, looking ahead, if the Strait tensions are resolved, gold will likely return to safe-haven and rate-cut expectations, resuming an upward trend. Conversely, concerns about inflation and reduced rate-cut prospects could lead to continued sideways adjustments. Nonetheless, the long-term outlook remains bullish, as rising inflation enhances gold’s appeal, while stagflation risks could temper inflation. Thus, regardless of current geopolitical developments, the recent dip and pressure on gold are just corrections within a larger bullish cycle, with varying durations. Over the next year, gold is still expected to climb and reach new highs.

Technically, on the monthly chart, gold closed above the upward trendline in March, maintaining a bullish outlook. The current month’s opening remains above this trendline, and as long as it does not close below it, new highs are expected.

On the weekly chart, gold continued last week’s rebound pattern, showing a bullish momentum after bottoming out, but it has not yet broken through the middle band or the 5-10 week moving averages, so the bullish momentum is not yet confirmed, and a correction is possible.

However, the 30-week moving average provides support below. For trading, a bullish rebound can be considered if prices hold above this support. If the rebound breaks through the 5-10 week moving averages, it could signal a shift to a stronger uptrend.

On the daily chart, gold is trading below the middle band and above the 10-day moving average, with oscillating momentum and unclear direction. If it cannot regain and hold above the 60-day moving average, a correction and further decline are likely, with a potential retest of the 200-day moving average support around $4,200.

In the short-term trading plan, focus on the 10-day and 144-day moving averages for support and potential long entries. Resistance levels are the middle Bollinger Band and the 30-day moving average, which could serve as short-term resistance for short positions.

Real-time trading signals and specific entry/exit points will be based on actual market conditions.

Preliminary reference points for today’s trading, with actual levels to be confirmed by real-time updates:

Gold: Support at $4,580 or around $4,460; resistance at $4,680 or around $4,730.

Silver: Support at $71.65 or around $69.55; resistance at $74.60 or around $75.70.

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