Gold prices fell by 1.3% during Monday’s trading, heading toward a decline for the second consecutive session, and are currently trading below the key level of $4600 per ounce.
The yellow metal is currently trading below the weekly pivot point at $4618, reflecting continued downward pressure on prices. Holding below this level is likely to reinforce the bearish trend, with support levels targeted at $4506, followed by $4398.
If gold break above the weekly pivot point at $4618, it may test the first weekly resistance level at $4726, a break above this level would be a positive signal that could pave the way for prices to rise toward the second resistance level at $4838.
In terms of geopolitical escalation, Over the weekend, U.S. President Donald Trump unveiled what he called “Project Freedom,” a push to help reopen stalled shipping traffic through the Strait of Hormuz, a vital conduit for a fifth of the world’s oil. Trump provided few details around the plan.
On Monday, the Associated Press reported that the Joint Maritime Information Center had set up an “enhanced security area” south of traditional shipping routes.
But Iran’s military warned U.S. forces not to enter the strait, claiming that it stands ready to “respond harshly” to any threat. Commercial vessels in the strait should also not make any movements without approval from Tehran’s armed forces, it added.
And, so, the stalemate between the U.S. and Iran drags on into a fresh week, with oil prices remaining well above pre-conflict levels and casting a pall over the global economy. Iran has said it is reviewing Washington’s response to its latest offer for peace talks, although, as ever, murkiness surrounds the diplomatic back-and-forth.
From a fundamental perspective, investors are likely to fix their gazes on the upcoming data docket this week.
Headlining the raft of indicators will be the April employment report, which could offer fresh insight into whether the Iran war is impacting a recently resilient American labor market.
Economists expect the U.S. economy to have added 73,000 roles last month, the payrolls data in March stood at 178,000, which was much stronger than anticipated, while the unemployment rate is tipped to equal March’s pace of 4.3%.
Finally, markets will also pay close attention to the U.S. service and manufacturing PMI reports for April.