Gold prices stabilized during Monday’s trading session, remaining above the key level of $4,000 per ounce. The yellow metal is currently awaiting further positive momentum to rise for the second consecutive session.
Gold is currently trading below the weekly pivot point of $4,026; if it fails to hold above this level, it could retreat toward the first weekly support level at $3,950. A break below this level would likely extend the decline, with the next support level at $3,881.
If gold succeeds in breaking above the weekly pivot point of $4,026 then stabilizes above, it will retest the resistance levels near $4,095 then $4,172.
In terms of geopolitical tension, U.S. forces hit Iran for a ninth consecutive day on Monday as concerns grew over shipping through the Strait of Hormuz after Iran said two oil tankers had exploded and been immobilized.
The Islamic Revolutionary Guard Corps said on Monday they had targeted U.S. aircraft at Jordan’s Aqaba airport with ballistic missiles, as well as U.S. military assets and equipment at Kuwait’s Al-Adiri camp and Ali Al Salem Air Base, and in Syria.
Sirens sounded in Bahrain on Monday morning, the country’s interior ministry said, while the Kuwaiti army said it was intercepting hostile drones in an Iranian attack.
The strikes are part of an escalating cycle of attacks between the U.S. and Iran after an interim ceasefire agreement signed a month ago unravelled, deepening a struggle for control over the Strait of Hormuz that has disrupted energy supplies and stoked fears of global inflation.
On the economic data front, a flash reading of U.S. manufacturing and services sector activity for July from S&P Global will be in focus on Friday.
S&P’s composite purchasing managers’ index for June stood at 52.2, boosted by a jump in the services industry stemming from the FIFA World Cup tournament that was jointly hosted by the U.S., Canada and Mexico.
Manufacturing activity also increased for a fourth consecutive month, as businesses raced to build up their supply backstops to combat possible shortages and elevated prices due to the Iran war.
Finally, markets are awaiting U.S. jobless claims data, with forecasts indicating that the number of Americans filing for unemployment benefits will come in at 211,000, up from the previous reading of 208,000. If this data comes in worse than expected, it could raise concerns about the health of the labor market, which would put additional pressure on the dollar and have a positive impact on gold prices.