Gold rebounds after dip below $4,110; bias stays neutral to bearish

FUNDAMENTAL OVERVIEW

Yesterday saw gold make a brief move below the 4,110 support, though there was no obvious trigger. It could have been that stops were activated once the price went through the level. However, the decline was quickly undone, and the metal currently sits above 4,110 once more.

The overall stance stays neutral to bearish, as there has been no meaningful shift in the underlying conditions. Additional pressure on gold could emerge in the near term, given the steady climb in oil prices following The Atlantic's report that the White House asked the Pentagon to look into military options for strikes on Iranian targets, possibly ahead of the midterm elections.

Furthermore, Axios notes that the Pentagon has reportedly directed the US Central Command (CENTCOM) to get ready for possibly resuming major combat operations.

No final call has been made as of yet, but the renewed risk of escalation is giving support to the oil market once more. Should this carry on, Treasury yields could push higher, and expectations for rate hikes could become more entrenched.

If the situation does not calm down soon, gold could experience another downward flush. Conversely, if the Fed continues to sound more dovish than the market anticipates, real yields might drop, which could offer a buffer for gold prices.

GOLD TECHNICAL ANALYSIS – DAILY TIMEFRAME

Looking at the daily chart, gold (CFD contract) is still in a consolidation phase near the lows. Should a pullback reach the main downward trendline, sellers may use it as a selling point, with a clear risk above it, aiming for a fall to the 3,885 level. Buyers, in contrast, would prefer to see a break higher to enter positions, targeting a rally toward the 4,700 level next, with 4,400 as the initial goal.

GOLD TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME

The 4-hour chart shows that the price dipped below the weekly low yesterday but ultimately recovered all the losses. From a risk-reward standpoint, sellers might see a better setup near the trendline to keep pushing for fresh lows, whereas buyers would require a higher break to set their sights on the 4,400 level.

GOLD TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME

On the 1-hour chart, the downside spike from yesterday is more apparent, likely due to stops being triggered after the 4,110 support gave way. Buyers may continue to defend the 4,110 area while aiming for a retest of the trendline, while sellers would look for a break to enter short positions, targeting the 3,885 level next. The red lines mark the average daily range for today.

UPCOMING CATALYSTS

Later today, there are speeches from the Fed's Waller and the latest US Jobless Claims numbers. The week wraps up tomorrow with the University of Michigan Consumer Sentiment survey.