With off its highs and risk assets rebounding, gold’s muted response to Middle East tension is telling. Momentum is stalling and $3400 remains a roadblock—leaving bulls with little to cling to without a fresh catalyst.
Gold Summary
is trading poorly in an environment where it would normally be thriving, hinting that directional risks may be skewing lower in the near term without another major escalation in geopolitical tensions in the Middle East. With riskier asset classes coming off their lows and crude prices now well off their opening highs, it suggests there may not be a scramble for safe havens as seen during similar episodes in the past.
Gold Fails at $3400 Again
Source: TradingView
Looking at gold on the daily timeframe, after two consecutive doji candles leading into the weekend, the price pushed back towards $3400 per ounce but was unable to reclaim the level. That fits with the price action seen earlier in the month, outside of the failed bullish break on June 13 when Israel first launched attacks on Iranian targets.
The reversal from this known resistance level only adds to the unconvincing price action we’ve seen in gold lately, making traders question: what more would it take to see the haven retest the record highs set earlier in the year? Something far more than what was seen over the weekend, it seems.
While indicators like RSI (14) and MACD sit in mildly bullish territory, there’s little evidence of a major acceleration in bullish momentum despite Middle East tensions. MACD has even crossed the signal line from above, providing an early warning that market momentum may be turning lower.
$3400 remains a key level to watch on the topside. If gold can climb above this level, it may encourage other bulls off the sidelines to look for a push towards the June 16 high of $3451.30 or even $3500.
However, if unable to reclaim $3400, it would make for a decent entry level for shorts, allowing for stops to be placed above the level for protection. $3340 provided support and resistance earlier this month, meaning it screens as an appropriate initial target. If it were to give way, the important 50-day moving average and December 2024 uptrend would loom as a far tougher test for shorts.