The gold market came back to life this morning. Investors began to hunt for opportunities after yesterday's big drop. The trading atmosphere remained tense with the uncertain geopolitical drama.
Iran's latest attack on the Strait of Hormuz sparked global supply concerns. Safe-haven assets are back in the spotlight for investors seeking immediate protection. Physical demand began to increase as prices showed signs of recovery.
These tensions quickly pushed up crude oil prices. High energy costs are set to drive inflation to more extreme levels. Investors are now worried that price pressures will remain in the market for longer.
The rise in US bond yields dealt a blow to gold. The market now expects the Federal Reserve to maintain high interest rates. A strong USD limits the room for gold to drive further.
MARKET TECHNICAL STRUCTURE
The current bias shows that the recovery phase is still fragile. The $4,550 level is the main barrier that needs to be broken immediately. If it fails, buyers may lose confidence and start to exit positions.
A strong support area is detected around the psychological level of $4,000. This level is the last defense zone for long-term investors. Any break below this level will drastically change the trend.
Gold is currently in a very sensitive reaction zone. We are seeing a clash between war sentiment and monetary policy. The upward momentum needs a new catalyst to continue to hold strong.
UPCOMING MARKET EXPECTATIONS
If the conflict in the Middle East spreads more openly. Gold has the potential to break new records due to panic in the global market. Investors will dump risky assets and switch to safe assets.
However, if the US inflation data remains extremely high. Selling pressure will return to haunt the gold market very strongly. Gold may have to submit to the increasingly powerful dollar.
UPCOMING IMPORTANT EVENTS
The announcement of the US Treasury Department's borrowing plan is the main focus. This data will determine the direction of long-term interest rates. It will have a direct impact on the cost of holding gold assets.
The market is at a very critical crossroads. Be careful of rapid and volatile price movements. Guard your margin before a big storm hits your trading account
