Gold has given back most of a short-lived rebound as the prolonged US-Iran conflict keeps financial conditions tight and pushes traders toward rate-hike bets. A de-escalation could spark a relief rally, but for now support near 3,885 stands between the metal and a slide toward 3,700.
Gold erased most of its recent gains as the near-term fundamentals failed to back the move. The bounce over the last couple of days looked largely technical, and it faded once the prolonged US-Iran conflict pushed oil prices even higher and traders increased their rate-hike bets.
With little else driving the market, traders are left monitoring US-Iran developments. A de-escalation would lead to a dovish repricing and trigger a relief rally in gold, but as long as the conflict continues, the tightening in financial conditions will keep the market under pressure.
There is also some fear that the Fed could surprise with a rate hike at the upcoming July meeting if the Middle East situation doesn't improve. The probability is low, yet such a move would send gold into new lows.
On the daily chart, a trendline is acting as resistance, and sellers are likely to keep leaning on it to push the metal into new lows. A break higher would open the door for a rally into the next major trendline around 4,500.
The four-hour chart has been mostly rangebound since late June. Buyers need a break above 4,200 to build conviction for a reversal. Sellers, meanwhile, are watching for a break below 3,885 that would extend the selloff into the 3,700 level.
The week closes with the Flash US PMIs, though the focus stays on US-Iran headlines. Until the conflict shifts, where gold heads next hinges on the geopolitical picture rather than the data.
Source: investingLive
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