Is gold at bottom? From a sharp drop to 4,023 dollars, it recovered to 4,200 dollars

【Igra. Market Report】This Week's Review★

This Week's Featured News

This week's gold market was a very volatile week.

In the first half of the week, amid worsening Middle East tensions and rising crude oil prices, inflation concerns and expectations of a Federal Reserve rate hike strengthened, and gold plunged to a six-month low of $4,023.

However, in the second half, expectations of a U.S.–Iran agreement emerged. The potential reopening of the Strait of Hormuz was on traders’ minds, and improved market sentiment helped gold rebound to the $4,200s.

As of the time of writing, it is around $4,216.

Why did it move?

Three main factors influenced this price action.

① Rising expectations of a Fed rate hike

Higher oil prices due to worsened Middle East tensions pushed inflationary pressure up.

U.S. CPI rose 4.2% year over year, and PPI rose 6.5%, fueling markets to strongly expect a rate hike within the year.

Higher rates are a headwind for gold, which does not generate interest.

② Dollar strength

Gold has traditionally been a safe asset, but this time funds flowed into the U.S. dollar.

The dollar index (DXY) rose toward the 100 level, putting pressure on gold prices.

③ U.S.–Iran agreement expectations

In the latter part of the week, market attention shifted to ceasefire negotiations.

If an agreement is reached, it could lead to the reopening of the Strait of Hormuz, easing concerns about energy price increases.

This prompted buybacks in gold as well.

This Week's Direction

This week,

・Worsening Middle East tensions

・Higher crude oil prices

・Inflation concerns

・Expectations of a Fed rate hike

led to a broad decline in gold.

On the other hand, in the latter half, relief rallies were seen as ceasefire expectations and inflation concerns cooled.

In the short term, gold is entering a rebound phase, but a cautious view remains prudent in the medium to long term.

Technical Analysis