Gold price is coiling near the $4000 support: What now?

The precious metal traded cautiously throughout the week but maintained a firm position near the $4,000 level. Despite this, it exhibited less volatility, oscillating between modest gains and losses before ultimately stabilizing, as investor sentiment remains mixed amid escalating geopolitical tensions between the US and Iran.

Following the initial decline, the metal rebounded effectively after the release of softer-than-expected US inflation data. The Consumer Price Index (CPI) figures largely diminished expectations of a rate hike in July, even as Federal Reserve Chair Kevin Warsh reaffirmed his commitment to achieving price stability. However, the upward momentum waned, and the metal faced renewed selling pressure on Thursday, retreating toward the lower end of its recent trading range.

Momentum Diminishes on Renewed Middle East Tensions

The metal retreated below the $4,000 threshold amid renewed US-Iran tensions. Recent military exchanges boosted demand for the US dollar and pushed global energy prices higher. Rising crude oil prices have heightened inflation concerns, leading to increased US Treasury yields and reinforcing expectations that the Federal Reserve may maintain restrictive monetary policy for an extended period. Additionally, the US dollar gained further strength following robust economic data, including a stronger-than-expected Philadelphia Fed survey reading of 41.4 and a drop in jobless claims to 208,000, which tempered hopes for early monetary easing.

Gold (XAUUSD) Technical Outlook

Gold prices are currently stalled below the critical $4,000 support level, raising concerns of a prolonged downturn as bearish sentiment intensifies. Recent recovery attempts have been capped near key trendline resistance, indicating that sellers continue to dominate market momentum.

The metal remains vulnerable to further declines if this trend persists, with initial support likely around $3,970. Continued selling pressure could push prices further down to the secondary support zone between $3,940 and $3,920. On the upper side, a decisive close above $4,100 is necessary to alleviate bearish pressures. A sustained break above this level could weaken the immediate downtrend and potentially support a broader recovery toward the $4,200 to $4,240 range.

Warning! This material is not intended as investment advice. Past performance data does not guarantee future returns. Investing in foreign currencies may affect your returns due to their fluctuations. Any transaction in securities may result in both profits and losses. The assumptions and expectations set forth in this material are only estimates that may not be accurate and may change depending on current economic conditions. These statements do not guarantee future returns.