Gold extended its losses into the new week after Trump told reporters he expects to resume bombing Iran after the midterms, reviving the selloff that followed his rejection of Tehran's Strait of Hormuz proposal. Oil, real yields and the dollar rose on the remarks, and the metal fell further through the Asian session as traders looked ahead to a week stacked with US data.
Bombing signal deepens the selloff
Gold opened the week lower and extended losses through the Asian session after Trump rejected Iran's proposal on Saturday and said he expected to resume bombing Iran after the midterm elections. The remarks reversed the brief relief gold had found over the weekend, when Iran's offer to reopen the Strait of Hormuz within seven days had helped avert a deeper collapse in the precious metal.
Oil prices, real yields and the US dollar rose again as the earlier optimism faded, weighing on gold once more. A breakthrough between Washington and Tehran would likely support the metal in the short term, as aggressive rate hike bets get pared back, while a prolonged stalemate or further escalation would likely keep it under pressure.
Technical levels in focus
On the daily chart, gold has collapsed since Trump rejected the latest Iranian proposal. The next natural target is the 3,885 level, where a major upward trendline also sits; a bounce there could draw buyers back in with defined risk below the trendline, positioning for a rally toward new record highs. Sellers, on the other hand, will look for a break lower to extend the drop toward the 3,500 level.
Meanwhile, the four-hour chart shows a downward trendline defining the bearish structure. Sellers are leaning on any pullback to keep targeting the 3,885 level, while buyers would need a break higher to position for a correction toward the 4,500 level next.
Fed data test the week ahead
The focus stays on the Middle East and the Federal Reserve. This week brings US Consumer Confidence and Job Openings data on Tuesday, the ADP report and the PCE price index on Wednesday, ISM Manufacturing PMI and Jobless Claims on Thursday, and the NFP report closing out the week on Friday.
Source: Investinglive
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