Gold Awaits a Directional Explosion, Here's the Scenario!
The current gold price remains stuck near the psychological level of US$4,200 per troy ounce. Technically, this area is a crucial barrier because gold has not been able to move far beyond it. The nearest support is at US$4,180, followed by US$4,165, US$4,140, and US$4,120. Meanwhile, the nearest resistance is at US$4,200–US$4,220, then US$4,245, and US$4,265. However, this week's gold direction will be determined not only by war tensions, but also by US PCE data and how the market interprets its impact on inflation, the US dollar, and Fed interest rate expectations.
The first scenario, if the PCE data comes out lower than expected, which is theoretically "good for gold," but at the same time geopolitical tensions intensify, new attacks occur, or the US-Iran ceasefire is disrupted, gold won't necessarily immediately rise. A low PCE could indeed suppress expectations of interest rate hikes and support gold. However, if new attacks cause oil prices to spike, the market could again fear rising energy inflation. Under these conditions, the US dollar could also strengthen as investors expect the Fed to be slow to cut interest rates. Therefore, gold has the potential to be highly volatile: it could briefly rise to US$4,220–US$4,245 due to a safe-haven reaction, but could fall again if the dollar and US bond yields strengthen.
In this first scenario, the area to monitor is US$4,200. If gold fails to hold above US$4,200–US$4,220, the rise will be short-lived. Selling pressure could send gold back down to US$4,180 and US$4,165. If US$4,165 is breached, the next correction target is US$4,140. However, if the conflict truly escalates into major panic and the market chooses safe-haven over the dollar, then gold has a chance of breaking through US$4,245 and heading towards US$4,265–US$4,300. So, the key isn't just a "hot war," but whether it fuels safe haven panic or actually fuels inflation and dollar strengthening.
For oil, in the first scenario, the clearest direction is upward. If geopolitics heat up again, particularly regarding the Strait of Hormuz, WTI, hovering around US$74, could potentially rise to US$76.50–US$78 first. If the market perceives a real risk of supply disruption, WTI could test US$80–US$82. Meanwhile, Brent, hovering around US$78, could potentially return to US$80–US$82.30. If the escalation becomes more serious, Brent could rise to US$84–US$86, or even approach US$90 if there is a real disruption to tanker routes. This rise in oil has the potential to weigh on gold as the market reassesses the risk of inflation.
In the second scenario, if PCE data comes out higher than expected, a "bad for gold" scenario, and geopolitics also escalates, the pressure on gold could intensify. A high PCE will further convince the market that the Fed should maintain high interest rates or even open the door to further rate hikes. If, at the same time, oil prices rise due to the escalating war, inflationary pressures will appear even more severe. This combination could strengthen the US dollar and bond yields, potentially leading to a decline in non-yielding gold despite the risk of war. In this scenario, gold risks falling from the US$4,190 area to US$4,165, and then US$4,140. If dollar pressure is particularly strong, the US$4,120 to US$4,085 area could be retested.
In conclusion, under current market conditions, geopolitical tensions do not automatically translate into gold prices rising. If conflict triggers a surge in oil prices and renewed inflation fears, gold could actually be under pressure due to rising US dollar and interest rate expectations. The most bearish scenario for gold is a high PCE coupled with rising oil prices due to the war, as both lead to a more hawkish Fed. Meanwhile, oil is likely to rise more easily in two scenarios if there is a real escalation, with WTI targets at US$78–US$82 and Brent at US$82–US$86. For gold, the key levels remain US$4,200 above and US$4,165 below. If US$4,165 is breached, the gold bias will shift to a more bearish level. Only if US$4,220–US$4,245 is firmly breached will gold have a chance to resist dollar pressure. (asd)*
Source: Newsmaker.id
