GOLD bears the brunt of energy shock amid widening Middle East war
Gold is off the lows but remains heavy at the start of the week on Monday as Oil is on fire due to escalating Middle East crisis.
The US Dollar stands tall amid risk aversion, energy shock and fading Fed rate cut bets.
Technically, Gold appears at a crossroads, with $5,000 the line in the sand for buyers.
Gold is reversing the early dip to near $5,000 on Monday, setting off the week on a bearish note amid relentless USD demand and soaring Oil prices.
Gold is bearing the brunt of the unprecedented surge in Oil prices this Monday, as markets brace for intensifying energy supply disruption amid a protracted war in the Middle East.
Some of the Gulf countries have scaled back oil production as the Strait of Hormuz is under the Iranian siege, disrupting safe passage of oil cargoes.
Saad Sherida Al‑Kaabi, Qatar’s Energy Minister, told the Financial Times on Friday he expects all Gulf energy producers to shut down exports within weeks, a move he said could drive oil to $150 a barrel.Kuwait, a member of the OPEC, announced precautionary production cuts, while Iraq’s southern oil output dropped to 1.3 million barrels per day from 4.3 million.
Markets are fretting that the energy crisis-driven inflation could dissuade the US Fed from lowering interest rates in the coming months.
This hawkish narrative is weighing negatively on the non-yielding Gold even as the bright metal is considered as an inflation hedge and a traditional store of value.
Meanwhile, traders are booking profits on the metal’s parabolic rise to cover losses incurred due to the war-led meltdown in the global stocks.
All eyes remain glued to the developments in the Middle East war, especially after US President Donald Trump said Sunday the new leader “is not going to last long”.
Further, signals on any near-term de-escalation that will open the Strait of Hormuz will also be on market’s radar for further trading impetus in Gold.
Daily technical analysis
The near-term bias is cautiously bullish as price holds above the 21-, 50-, 100- and 200-day SMA, with the shorter averages clustered well above the longer ones, reinforcing an established uptrend. The metal has bounced from the 38.2% Fibonacci retracement at $4,858.82 measured from the $4,401.99 low to the $5,597.89 high, underscoring the significance of that pullback floor. The RSI hovers just above 50, showing moderated momentum after prior overbought readings, yet still aligned with a gentle upside bias while the recent series of higher closes remains intact.
Initial resistance emerges at the 61.8% retracement near $5,141.05, where a daily close above would open the way toward the 78.6% level at $5,341.96, and beyond that the record high zone around $5,598. On the downside, immediate support is seen at the 50% retracement at $4,999.94, which converges with the rising 21-day SMA to create a nearby demand area; a break below would expose the 38.2% level at $4,858.82. Further weakness from there would bring the rising 50-day SMA around the $4,880 area into focus as the next key trend support, with the 100-day SMA much lower, reinforcing the broader bullish structure even in the event of a deeper correction.
GOLD bears the brunt of energy shock amid widening Middle East war
Gold is reversing the early dip to near $5,000 on Monday, setting off the week on a bearish note amid relentless USD demand and soaring Oil prices.
Gold is bearing the brunt of the unprecedented surge in Oil prices this Monday, as markets brace for intensifying energy supply disruption amid a protracted war in the Middle East.
Some of the Gulf countries have scaled back oil production as the Strait of Hormuz is under the Iranian siege, disrupting safe passage of oil cargoes.
Saad Sherida Al‑Kaabi, Qatar’s Energy Minister, told the Financial Times on Friday he expects all Gulf energy producers to shut down exports within weeks, a move he said could drive oil to $150 a barrel.Kuwait, a member of the OPEC, announced precautionary production cuts, while Iraq’s southern oil output dropped to 1.3 million barrels per day from 4.3 million.
Markets are fretting that the energy crisis-driven inflation could dissuade the US Fed from lowering interest rates in the coming months.
This hawkish narrative is weighing negatively on the non-yielding Gold even as the bright metal is considered as an inflation hedge and a traditional store of value.
Meanwhile, traders are booking profits on the metal’s parabolic rise to cover losses incurred due to the war-led meltdown in the global stocks.
All eyes remain glued to the developments in the Middle East war, especially after US President Donald Trump said Sunday the new leader “is not going to last long”.
Further, signals on any near-term de-escalation that will open the Strait of Hormuz will also be on market’s radar for further trading impetus in Gold.
Daily technical analysis
The near-term bias is cautiously bullish as price holds above the 21-, 50-, 100- and 200-day SMA, with the shorter averages clustered well above the longer ones, reinforcing an established uptrend. The metal has bounced from the 38.2% Fibonacci retracement at $4,858.82 measured from the $4,401.99 low to the $5,597.89 high, underscoring the significance of that pullback floor. The RSI hovers just above 50, showing moderated momentum after prior overbought readings, yet still aligned with a gentle upside bias while the recent series of higher closes remains intact.
Initial resistance emerges at the 61.8% retracement near $5,141.05, where a daily close above would open the way toward the 78.6% level at $5,341.96, and beyond that the record high zone around $5,598. On the downside, immediate support is seen at the 50% retracement at $4,999.94, which converges with the rising 21-day SMA to create a nearby demand area; a break below would expose the 38.2% level at $4,858.82. Further weakness from there would bring the rising 50-day SMA around the $4,880 area into focus as the next key trend support, with the 100-day SMA much lower, reinforcing the broader bullish structure even in the event of a deeper correction.
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