The outlook for gold prices suggests a possible rebound in the near term, following a recent correction spurred by easing concerns of a broader conflict in the Middle East and a tech-driven rally on Wall Street. Overnight, risk sentiment flowed into Asia, exerting downward pressure on gold prices.
However, investor sentiment appears cautious as attention turns to upcoming preliminary business PMI data from key regions including the UK, Eurozone, and the US. These releases are poised to offer insights into the timing of potential interest rate adjustments by major central banks, particularly the US Federal Reserve (Fed). Heightened expectations for delayed Fed rate cuts continue to weigh on gold prices, alongside hopes for de-escalation in the Israel-Iran conflict following Iran’s dismissal of Israel’s retaliatory actions.
Should risk aversion intensify on disappointing PMI figures, the US Dollar may regain momentum, amplifying pressure on gold prices. Conversely, weak PMIs could signal economic deceleration in advanced economies, fueling expectations of an earlier policy shift. This resurgence in bets for an earlier Fed rate cut could provide a boost to gold prices.
According to technical analysis, gold prices faced significant selling pressure after closing below the $2,370 mark on the four-hour chart. The sell-off breached support levels at $2,334, testing bids below $2,300. A potential bounce could encounter resistance around the $2,320 level, with further challenges at the $2,334 mark. However, sustained upward movement beyond this point is crucial for a broader recovery towards the $2,365 range.
Despite the possibility of a rebound, the upside for gold prices may be limited. Persistent selling pressure could bring support levels into focus, with key demand areas lying between $2,284 and $2,274. Should sellers maintain control, the final support for gold buyers is anticipated around the $2,252 mark.