Gold Rebounds from One-Month Low Despite Inflation Fears
Fundamental analysis of gold
Gold prices are currently trading near $4,570 per ounce, and despite today’s rise, they remain hovering near a one-month low, as rising energy costs have exacerbated inflation fears and reinforced expectations that major central banks may refrain from cutting interest rates as had been anticipated before the war began.
President Donald Trump said the United States would maintain its naval blockade of Iran until it agrees to a nuclear deal, while Tehran accused Trump of attempting to subjugate the country through economic pressure and internal divisions.
The ongoing conflict in the Middle East and the near-total closure of the Strait of Hormuz have destabilized global markets, prompting traders to scale back their bets on interest rate cuts this year and instead begin anticipating the possibility of hikes by 2027.
On the other hand, the U.S. Federal Reserve kept its monetary policy unchanged, as widely expected, despite four members dissenting from the decision, underscoring growing divisions over monetary policy expectations amid mounting uncertainty stemming from the Iranian conflict.
Federal Reserve Chair Jerome Powell also confirmed he will remain at the Fed after his term ends next May; Powell’s decision to stay on as a governor after his term as Fed chair ends prevents Trump from nominating a replacement who favors lowering interest rates.
Many analysts expect Powell to join the hawks in an effort to thwart further attempts by Trump and the new Fed Chair Kevin Warsh to cut interest rates.
Technical analysis of gold
Gold prices are trading within a descending price channel on the four-hour chart, and rose after reaching the lower boundary of this channel near $4,510 per ounce.
We expect the precious metal to rise toward the upper boundary of this channel near $4,625–30 per ounce.
From there, we will see how gold interacts with this channel: will it rebound with reversal candles and retreat again, or will it break through and then breach the $4,665 level to the upside? In that case, we expect further gains toward $4,725 and then $4,780 per ounce.
