Whether gold prices can hold above the crucial $4,000 mark in the short term depends on three main themes. If none of these themes align, gold prices may remain below $4,000 for some time. Firstly, market participants’ expectations regarding whether the Federal Reserve’s quarter-point rate hikes this year represent the ceiling or the minimum are crucial. This expectation of interest rate direction is paramount.

Secondly, the smooth reopening of the Strait of Hormuz, allowing oil tankers to freely supply the world with crude oil at normal costs, is another important factor influencing gold prices. If supply fails to return to pre-Iranian war levels, high oil prices will inevitably suppress investors’ risk appetite for gold. The third theme is whether the Federal Reserve has a basis for raising interest rates. If most of the upcoming US economic data is positive, investors will infer that the Federal Reserve, given favorable economic conditions, will not hesitate to raise interest rates to curb inflation.

These three themes currently appear unable to converge to provide positive support for gold prices above $4,000. Therefore, the short-term momentum for gold is weak, and there is a possibility of testing the support level of $3,959.

A short position can be established around $4,072, with a short-term target of $3,921 for profit-taking, and a stop-loss at $4,092.

Gold Price 1-Hour Chart:

Ferris Kwok

Chief Analyst
Success Finance Group

Email: ferris.kwok@successfn.com