Gold prices remained under downward pressure during Monday’s trading, as they attempted to recoup some of their losses after posting a significant decline of 2.4% in the previous session.
The yellow metal is currently trading below the weekly pivot point at $4608, reflecting continued downward pressure on prices. Holding below this level is likely to reinforce the bearish trend, with support levels targeted at $4443, followed by $4345.
If gold break above the weekly pivot point at $4608, it may test the first weekly resistance level at $4705, 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 $4870.
In terms of geopolitical escalation, the U.S.-Iran conflict, which has been ongoing for about 80 days, is likely to remain the focus of market attention during this week’s trading.
Yet, as analysts have noted, a ceasefire between Washington and Tehran has now lasted longer than the opening phase of bombardments which began in late February.
Whether that truce can hold, and a permanent peace deal be forged has become one of the central questions for investors. U.S. President Donald Trump’s trip last week to China, a major importer of Iranian oil, did not result in Beijing agreeing to act as a guarantor on a peace accord, although the president told Fortune in an interview that Tehran has been “dying to sign” a deal.
U.S. President Donald Trump is currently facing a critical decision between resuming military operations against Iran or continuing political and diplomatic pressure in an effort to achieve a breakthrough.
Although the diplomatic route is still viewed as the most likely scenario, the prospects for military escalation have risen significantly, especially with increasing reports that Trump received extensive briefings from his advisors on various military options over the weekend.
From a fundamental perspective, markets will also pay close attention to the U.S. service and manufacturing PMI reports for May.
In addition, markets are awaiting U.S. jobless claims data, with forecasts indicating that the number of Americans filing for unemployment benefits is expected to fall to 210,000, a slight decline from the previous reading of 211,000.
Finally, the FOMC meeting minutes due Wednesday may offer clearer guidance on the Fed’s policy path, with any signals on future interest rates likely to influence market movements.