Gold price faces resistance at $4,200 again, patiently waiting for entry opportunities

Source: Xinhua Finance

Xinhua Finance, Beijing, June 23 – On Monday (June 22), international gold prices opened at $4,144.68, reached a high of $4,221.13, a low of $4,136.07, and closed at $4,180.87, with a daily fluctuation of $85.06, up $23.62 or 0.55%. The daily K-line chart displayed a small bullish candlestick. Overall, the current gold price remains in a weak downward trend since mid-April. After rebounding from the 4,000-dollar mark, whether the secondary bottoming process has ended awaits further verification.

On the fundamentals, regarding the geopolitical situation, progress in the US-Iran peace process continues steadily: The United States has established a coordination mechanism to prevent further escalation of Middle East conflicts; Switzerland reported that intensive diplomatic talks held at Mount Bürgen have achieved “constructive progress,” with parties agreeing on a roadmap, based on a memorandum of understanding, to reach a final agreement within 60 days and setting up a high-level committee to plan the next stage of political and technical processes. Multiple signals point to a convergence of geopolitical risks in the Middle East, sending oil prices back below $80 and reducing market inflation expectations.

According to Morgan Stanley's latest research, although interest rate hikes have traditionally pressured gold prices, historical data shows a more complex picture—one month after the Federal Reserve raises interest rates by 25 basis points, gold averages a gain of 0.84%, while after a 25 basis point cut, it averages a gain of 3.93%. Therefore, while rate hikes exert downward pressure on gold, the market tends to “buy the rumor, sell the fact.” Under the negative expectation of rate hikes, gold prices generally undergo correction, and after confirmation of the hike, the market might turn slightly bullish or neutral.

In summary, progress in Middle East negotiations remains noteworthy, while falling oil prices may decrease the likelihood of further rate hikes. Whether the Federal Reserve will maintain its hawkish stance depends on more future data. Faced with such uncertainty, gold prices are temporarily trading at low levels, with no sign of a clear trend reversal yet.

From a technical perspective, the weekly K-line shows that since mid-April, gold has remained below the 5-week moving average, indicating a weak pattern; recently, prices found temporary support near the $4,022 low and the lower Bollinger Band around the key $4,000 mark. Overall, gold faces resistance above and support below; however, the downward trend has yet to end and may continue range-bound in the $4,100-$4,290 low zone.

The daily K-line pattern shows gold prices still in a wide downward channel between the middle and lower Bollinger Bands, roughly in the $4,322-$4,049 range and continuing to display weakness. In the short term, the 5-day and 10-day moving averages are clustered between $4,200 and $4,220, creating resistance, while support is found at last week’s $4,120 low, leading to trading between $4,220 and $4,120.

In conclusion, gold prices retreated after touching the middle Bollinger Band last week and are now testing for a secondary bottom and whether $4,022 will serve as a short-term low. Key support levels to watch are the $4,100 mark and the lower Bollinger Band near $4,060.

(Author: Research team at Beijing Gold Economic Development Research Center)

Editor: Zhu Henan