Gold prices fell 1% on Monday, heading toward losses for the second consecutive session, and are trading near their lowest levels since March 23 at $4290 per ounce.
The yellow metal is currently trading below the bearish channel’s lower line on the four-hour timeframe, a sustained move below this level is likely to lead to a resumption of the decline, targeting weekly support levels at $4244 then $4161.
If gold break above the bearish channel’s lower line, it may test the weekly pivot point at $4395; a break above this level would be a positive signal that could pave the way for prices to rise toward weekly resistance levels near $4479 then $4629.
In terms of geopolitical escalation, Israel said on Monday it hit a petrochemical plant in Iran’s southwest, along with strikes elsewhere on military targets, after U.S. President Donald Trump reportedly told Israeli Prime Minister Benjamin Netanyahu to refrain from further attacks.
Overnight exchanges of fire between Iran and Israel will only worsen an already “chaotic diplomatic process” with the United States, Iranian Foreign Ministry spokesperson Esmaeil Baghaei said on Monday, adding that Tehran was exchanging messages with Washington in an atmosphere of “extreme suspicion”.
Baghaei said Israel’s actions in Lebanon, whether carried out with U.S. knowledge and consent or not, were aimed at sabotaging diplomacy. He said Washington, as a party to the April 8 ceasefire, bore direct responsibility for any violations, including attacks attributed to Israel, and he added that the world should be concerned about a broader regional conflict.
The Strait of Hormuz will be open but under new conditions to be set by Iran and Oman, including a transit fee, Iran’s ambassador to Moscow was quoted as saying on Monday.
The U.S.-Israeli war on Iran has largely cut oil flows via the strait, which before the conflict saw one-fifth of the world’s oil pass through. Several tankers have managed to leave the Gulf recently, but oil and liquefied natural gas flows are still severely constrained.
From a fundamental perspective, investors will be keeping tabs on new inflation data, due out on Wednesday.
The U.S. consumer price index is seen accelerating to 4.2% in the twelve months to May, compared to 3.8% in the prior month. On a monthly basis, CPI is tipped to cool to 0.3% from 0.6%.
Stripping out volatile items like food and fuel, so-called “core” CPI is anticipated to speed up to 2.9% year-on-year and 0.5% month-on-month.
Middle East tensions are likely to be hovering in the backdrop of these numbers, especially after renewed strikes between Iran and Israel cast doubt over whether President Donald Trump can negotiate a lasting peace deal with Tehran.