Gold prices are on track to close this week with an increase of 3%, trading above the threshold of 4,600 USD/ounce. However, this precious metal has faced great resistance on Wednesday and Thursday, when it could not overcome the resistance zone of 4,800 USD/ounce.
Analysts say price movements show that gold is still stuck in a stalemate, due to the impact of the conflict between the US, Israel and Iran. For most of the week, gold and silver both recorded upward momentum, as investors expect the war to be resolved soon.
Analysts point out that the market is now starting to consider the possibility of a longer conflict, in the context of oil prices returning above the 100 USD/barrel threshold before the long Easter holiday.
Expectations for further disruptions in the global supply chain are also supporting the persistent strength of the USD.
The promise to bring Iran back to the Stone Age is contrary to his previous statement about ending the conflict within 2-3 weeks, in the context of positive negotiations" - Mr. Alex Kuptsikevich - Market Analysis Director of FxPro - said. "Polymarket participants estimate the possibility of the war between the US and Iran ending before the end of June is 65%. If the Strait of Hormuz is blockaded before that time, this will be a real disaster for the global economy.
Mr. Kuptsikevich believes that this incertitude will continue to create pressure to hinder gold's upward momentum.
The conflict in the Middle East is weighing on gold prices, amid expectations that central banks will raise interest rates to cope with rising inflation due to rising oil prices," he said. "This is a rather short-term view, because current fuel prices are a shock to consumers, and then will be a shock to the economy, forcing monetary policy to be loosened rather than tightening.
However, first of all, we need to hear whether central banks share this view or not; currently, they are still focusing on inflation. In the medium-term price targets, we are tracking the 4,200 USD mark.
If gold falls to this level, the upward trend is still not broken. But if this milestone is broken, it will be a signal of reversal of the three-year upward trend. Conversely, if it bounces back from this zone, the hope that the upward trend of gold prices has not ended will still be maintained.
Mr. Nick Cawley - market analyst at Solomon Global - said he sees gold in a solid recovery state, after falling below 4,100 USD/ounce at one point during a strong sell-off last month.
He added that the key factor for this precious metal is still the war with Iran.
Inflation will continue to be a concern in the short and medium term, which cannot be underestimated. Central banks will begin to tighten monetary policy in the next few weeks. However, as long as the market believes that this is only a short-term situation and interest rates will fall back from the end of this year onwards, traditional disadvantages to gold will only be mild.
The next important milestone for gold is 5,000 USD/ounce - mainly more psychological than a real technical resistance level. If gold clearly breaks through above this level in the coming weeks, the market will turn its attention back to the historical peak set at the end of January," he said.
