Weakened geopolitical support, combined with the continued strength of the US dollar, has extended gold’s adjustment phase. A range-bound approach is recommended.
During the Asian session on Tuesday, spot gold retreated to near $4,620, showing a significant pullback from its previous high, and overall exhibiting a consolidating pattern after a failed upward attempt. From a market structure perspective, gold is currently caught in a tug-of-war among multiple factors, but short-term bearish signals are gradually strengthening.
Fundamentally, the situation in the Middle East remains centered around the Strait of Hormuz. U.S. President Donald Trump’s earlier deadline and strong signals once boosted risk aversion. However, as the market gradually digests the associated risks, the marginal support for gold prices from geopolitical factors has notably weakened, failing to drive a sustained upward trend. This suggests that the current market is more focused on macro variables rather than single-event drivers.
At the same time, the macro environment is exerting significant downward pressure on gold. Expectations for Federal Reserve policy remain tight, with markets generally predicting interest rates will stay elevated for an extended period. Additionally, the U.S. Dollar Index continues to operate within a high range, reinforcing the pressure on gold. Since gold is priced in dollars, a stronger dollar typically means reduced attractiveness for non-dollar investors, thus curbing price increases.
On the inflation front, persistently high oil prices further reinforce market expectations of sticky inflation, which also diminishes rate-cut expectations to some extent. Overall, the combination of ‘high interest rates and a strong dollar’ is becoming the dominant factor in the current gold price trend, making it difficult for gold’s safe-haven attribute to fully play out.
From a technical perspective, on the daily chart, gold faced clear resistance after touching a dense pressure zone during its earlier rally, compounded by the downward trend line forming a typical ‘false breakout and pullback’ structure. The current price has fallen back below the pressure zone, indicating insufficient bullish momentum. Key resistance lies in the $4,680-$4,700 range, where previous highs and trendline pressures overlap, making it difficult to break through in the short term. Support below is at $4,550, with further support at $4,400; a breach would confirm the continuation of a medium-term correction. Momentum indicators show signs of a MACD death cross, with the RSI retreating from overbought levels to neutral territory, signaling significantly weakened upward momentum.
On the 4-hour chart, gold exhibits a downtrend with gradually lowering highs, forming short-term downward trend line resistance. Prices have repeatedly rebounded near the trend line without breaking through, indicating strong overhead selling pressure. The short-term moving average system has shifted to a bearish alignment, enhancing the downward signal. Current short-term resistance is located in the $4,650-$4,680 range; if a rebound fails to surpass this zone, the corrective rhythm will likely continue. Critical support below is at $4,550, with a potential acceleration of the downturn if breached.
Editor’s Summary:
The dominant logic in the current gold market is shifting from ‘geopolitical-driven’ to ‘interest rate and dollar-driven.’ While the situation in the Middle East still provides some support, its impact has clearly diminished, whereas the high-interest-rate environment and a strong dollar continue to weigh on gold prices. Technically, gold has entered a medium-term correction phase and is unlikely to restart an upward trend until key resistances are broken. Going forward, close attention should be paid to movements in the dollar and changes in interest rate expectations, with gold prices expected to trade within a range but with a bias towards weakness.
