Huang Lichen: Inflation concerns dampen interest rate cut expectations; gold rebound is significantly limited

On April 6, last Friday the precious metals market was closed all day due to a U.S. holiday. Regarding next Monday’s trading ideas, we recommend that everyone first focus on the strength of support at $4600 and $4550. For the upside space of a rebound, watch $4700 and $4800. From the subsequent price action, on Monday this week the market opened lower, fell to around $4600 and stabilized. It rebounded to $4678 but met resistance. Currently it is trading at $4649. Continue to maintain a range-bound trading stance, which is basically consistent with our earlier expectations.

Wolfinance’s top-rated analyst believes that last week gold at one point stabilized and then rose, setting a new high for the past week. This was because the U.S. released a ceasefire-truce signal, stating it would end the war in about two to three weeks, which led to a short-term pullback in oil prices. The dollar and U.S. Treasury yields also fell, providing support for gold’s rebound. However, by last Thursday, Trump issued his latest remarks on the Iran issue, without providing a timeline for ending the war. He also clearly said that in the coming weeks he would continue to push forward with military actions against Iran. As concerns about an energy supply disruption intensified again, oil prices surged in the short term, nearly recouping all of the losses from that week. The dollar and U.S. Treasury yields rebounded, and gold ran into resistance and pulled back.

On Monday this week, gold opened lower, stabilized, and saw a modest rebound because related parties revealed that the U.S.-Iran side and regional mediators are discussing a possible ceasefire agreement lasting up to 45 days. The agreement is expected to ultimately end this war. However, gold’s rebound was clearly limited. Over the past period, oil prices surged significantly due to the conflict, intensifying inflation worries. This has increased market expectations that the Federal Reserve may keep interest rates high for a longer time. The high-rate expectation exerts downward pressure on gold.

On the daily chart, after gold stabilized and rose but met resistance, it has temporarily stabilized above $4600 and is running in a range-bound pattern. For support below, you can watch the $4600 whole-number level. This is the day’s intraday low for gold’s decline, and also the level where gold’s earlier sharp selloff bottomed and rebounded but then met resistance. Next, pay attention to around $4550 near last Thursday’s gold session low. For resistance above, you can watch the level of $4700 at last Thursday’s point where gold bottomed and then rebounded. Next, watch the level where gold rose but met resistance last Thursday and then started to fall, at $4800. The 5-day moving average forms a bullish “golden cross,” and the MACD indicator forms a bullish “golden cross,” indicating that gold still has a rebound demand. However, the KDJ and RSI indicators form a golden cross but turn downward, showing that gold’s rebound is still clearly being suppressed.

Gold weekend reference: Because related parties revealed that the U.S.-Iran side and regional mediators are discussing a possible ceasefire agreement that could last up to 45 days, gold has stabilized and stopped falling in the short term. However, due to inflation worries that weigh on rate-cut expectations, gold’s rebound has been clearly limited. In terms of trading, it’s recommended to take a range-bound approach. For support, continue to watch the strength at $4600 and $4550. For the rebound upside space, continue to watch $4700 and $4800.

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