Gold Price Rebounds, But Technical Pressures Persist

The gold price has rebounded slightly after forming a lower low below $4,325 due to suspected Bank of Japan intervention in the USD/JPY pair. This move helped calm market nerves and provided some support for gold.

However, not much has changed fundamentally to signal a return to the risk-on, dollar-off trade. Risk assets remain under pressure despite the small recovery. Oil prices eased from their overnight highs after the latest exchange of strikes between the US and Iran, but WTI was climbing back above $90 a barrel at the time of writing.

The problem is that several pressures are now reinforcing each other. Oil is surging on the escalating US-Iran conflict, raising concerns about inflation and keeping expectations for a more hawkish Fed elevated. At the same time, global bond yields continue to rise, making equities and other risk assets less attractive.

The technical gold outlook suggests that if it breaks below $4,065, the recent bullish move will be invalidated. On the upside, breaking above the $4,400-$4,436 region would be a positive technical move for the short-term gold outlook.