Gold Remains Under Pressure as US Dollar Strength Dominates

Gold remains under a temporary bearish pressure affected by price stability below the immediate resistance of the psychological zone $4600, which is also the recent high tested on 25th March.

Macroeconomic conditions continue to boost demand for US Dollar and real yields remain elevated.

The rebound attempts off the lows of $4100, reaching 38.2% Fibonacci retracement at $4602, reflects a corrective pullback within a broader downward correction beginning from the record high, and key resistance zones are very likely to attract fresh selling interest.

The main bias seems to be "Sell the rallies" in the absence of a clear and strong structural breakout above $4500-$4550

Gold 4 Hour Analytical Chart by www.skcharting.com

Fundamental Drivers:

• Fed’s Hawkish Stance: Gold prices are very sensitive to monetary policies and forward guidance by Federal Reserve. Prolonged uncertainty about interest rate cuts is working in favour of real yields which in turn increase the opportunity cost of holding Gold, a non-yielding asset.
• US Dollar Strength: As the US Dollar Index gains strength on the back of resilient economic data, Gold prices come under pressure.
• Inflation concerns: As inflation remains sticky, the Fed’s decision-making process becomes more cautious, and the "Higher for Longer" narrative remains in place which works against Gold prices.
• Geo-Political Risks: Markets seem to have factored the war premium in prices, and any news of de-escalation or ceasefire will cause sharp correction on the drop of a hat.

Technical Drivers:

• Price stability below 1 Hour 50 EMA $4492
• Price stability below 4 hours 50 EMA $4640
• Prices are moving inside a broad descending channel leaning on trendline support.
• RSI is below the neutrality of 50

Trend Turns Bullish If:

Price makes a strong breakout above $4480-$4490, with further confirmation on a decisive breakout above the psychological zone $4500

Important Levels to Watch:

• Resistance $4480, $4500, $4520
• Support $4400, $4380, $4360

Short-term Outlook:

Gold is likely to trade sideways with temporary consolidation with a bearish bias affected by price stability below immediate resistance $4480

A strong breakout above this zone may lead to further upside recovery towards $4520-$4550 while bullish trend requires strong breakout above $4640