Gold bears gather for another push against the struggling bulls

Gold prices continue to lose ground during the early European session on Thursday as escalating tensions between the United States and Iran raise concerns about inflation. The growing fears of inflation increase the likelihood that central banks will adopt tighter monetary policies to address these concerns. Gold is particularly sensitive to rising interest rates because higher rates raise the opportunity cost of holding non-yielding bullion, reducing its appeal.

Gold rebound muted amid persistent inflation concerns

The precious metal has faced intense selling pressure throughout the month. Although gold rebounded after hitting a fresh multi-month low on Monday, bulls failed to sustain upward momentum. Market conditions remain tense as investors express concern over a possible resurgence in inflation, particularly with the conflict in Iran approaching the one-month mark. Efforts to resolve the situation seem to have stalled after Iran rejected the 15-point ceasefire proposal put forth by the US.

As of this writing, gold trades near $4,450. Looking ahead, a stronger US dollar and expectations of higher interest rates continue to weigh on investment demand for precious metals. A further decline in gold prices over the coming months seems likely. However, given the sizeable recent drop, a further short-term bounce is possible. Overall, the market is expected to remain volatile in the near term due to ongoing geopolitical tensions.

Gold (XAUUSD) Technical Outlook

From a technical standpoint, the gold daily chart indicates that the metal is retracing its recent gains. On the downside, significant support is predicted at $4,410/00, which has held early today; further down, demand is expected around $4,370, followed by $4,300, which will operate as the next level of support. However, if the bulls can generate a strong reversal swing, a liquidity grab might pave the way for a short-term rebound towards resistance above $4,500/30. The strong bullish set-up would be reversed only if the gold settled above $4,530, at which point it might extend to the next resistance level of $4,600/10, then $4,700/30.

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