Gold Prices Rally Following Key Technical Breakout Amid Geopolitical Tensions

Fundamental Overview

Gold staged a rebound yesterday, attributed to a potential squeeze following the breakout of a key trendline that had limited upward movement for several weeks. The recent soft US inflation data and dovish market repricing have shifted the risk/reward balance favorably for gold. However, traders are likely awaiting a de-escalation in US-Iran tensions for a more sustained upward trend. Current headlines surrounding US-Iran relations continue to drive price action, with de-escalatory news likely to support gold prices, while further escalations could exert downward pressure.

Gold Technical Analysis – Daily Timeframe

On the daily chart, gold has pulled back into a major downward trendline. This level is expected to attract sellers, who may position for a decline towards the 3,885 mark. Conversely, buyers will be looking for a breakout to facilitate a move towards the next trendline around 4,500.

Gold Technical Analysis – 4 Hour Timeframe

The 4-hour chart indicates that the break above a minor downward trendline has triggered a squeeze towards the major trendline. Sellers are anticipated to enter around these levels, with a defined risk above the trendline, aiming for a drop to 3,885.

Gold Technical Analysis – 1 Hour Timeframe

The 1-hour chart shows a minor upward trendline defining the recent pullback. Buyers are expected to lean on this trendline, maintaining a defined risk below it to push for new highs. Sellers will be looking for a break to increase bearish positions towards the 3,885 level. The red lines on the chart represent the average daily range for today.

Upcoming Catalysts

Tomorrow, the latest US Jobless Claims figures will be released, followed by the Flash US PMIs on Friday. Market focus remains on developments in US-Iran relations, which could significantly impact gold prices.