Gold Under Pressure as US-Iran Tensions Rise and CPI Looms

FUNDAMENTAL ASSESSMENT

Gold's price movement has been slightly negative since Friday, following the robust US NFP data that revived expectations of Fed rate increases and pushed real yields higher. An increase in real yields lifts the opportunity cost of owning gold, as gold provides no interest income whereas risk-free government bonds give a positive return adjusted for inflation.

The main factors to monitor are the conflict between the US and Iran and the Fed's tightening outlook. As Middle East tensions intensify, oil prices are climbing consistently, raising the risk of inflation. Meanwhile, the Fed has been pushing back against rising inflation expectations by taking a hawkish stance and indicating it may raise rates if core inflation begins to trend in the wrong direction.

That makes Friday's US CPI release a crucial event. Unless there is an unexpected diplomatic breakthrough between the US and Iran, gold prices are expected to stay largely rangebound or slightly negative, as traders may eventually start positioning ahead of the CPI data.

A CPI reading that is weak or matches expectations would probably lift gold, given that Fed official Waller has said he would only think about a rate hike if the CPI comes in hot. On the other hand, a higher-than-expected core monthly inflation figure would probably set off another gold selloff as rate hike expectations strengthen.

GOLD TECHNICAL ANALYSIS – DAILY TIMEFRAME

Gold is nearing the 4,311 support area. Should the price reach that level, buyers are likely to enter with a defined risk below support, aiming for a rally toward 4,890. Sellers, conversely, will look for a break below that support to build short positions targeting a drop to 3,885.

GOLD TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME

On the four-hour timeframe, a descending trendline defines the recent bearish pattern. A pullback to that trendline would likely attract sellers leaning on it with risk above, continuing the push to new lows. Buyers, in contrast, need a break above the trendline to add to bullish positions aiming for 4,890.

GOLD TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME

On the hourly chart, a minor downward trendline marks the bearish momentum. Sellers are expected to continue leaning on that trendline with risk above, aiming to push to new lows. Buyers will wait for a break above to enter for a pullback to the four-hour trendline.

UPCOMING CATALYSTS

Tomorrow brings the US PPI report and weekly jobless claims. Friday ends the week with the US CPI data.