Gold Prices Struggle to Recover as Dead Cat Bounce Takes Shape

Gold prices are attempting to stabilize after a sharp selloff, but the recovery lacks conviction. The recent rebound is being viewed as a potential dead cat bounce by analysts at StoneX.

The weekly chart shows that gold's rapid decline was halted by an elongated bullish hammer last week, but follow-through has been weak. On the daily chart, price action suggests a dead cat bounce taking shape with choppy price action grinding higher in a lackluster fashion.

Options markets continue to lean bearish, with traders favoring downside protection despite the recent rebound. Implied volatility has picked up again, suggesting markets expect bigger moves ahead, but it is skewed to the downside.

The macro backdrop is hardly supportive for a sustained rally, with oil prices elevated and geopolitical uncertainty lingering. The US dollar holding firm near highs also adds pressure on gold's upside.