International Gold Prices Fluctuate Near $4140: Market Game Under Geopolitical Risks and Rate Hike Expectations
Introduction
International gold prices extended a short-term bullish tone during Asian hours on Monday (July 22), refreshing a two-week high near $4,141.59\/oz, close to the 200-period moving average on the 4-hour chart. Prices have since eased slightly to around $4,130\/oz. Market sentiment is in a delicate balance: on the one hand, hopes that US-Iran diplomacy could ease energy prices and moderate the Fed's hawkish expectations provide a rebound opportunity for gold; on the other hand, persistent geopolitical frictions and elevated rate hike probabilities keep gold bulls cautious.
The US Dollar Index took a breather after four consecutive days of gains, providing breathing room for gold's rebound. The core contradiction lies in investors weighing the possibility of the Fed maintaining a tightening stance to curb energy-driven inflation against the geopolitical risk premium from US-Iran uncertainty.
Diplomatic Engagement and Military Strikes Coexist, Middle East Situation Grips Global Nerves
Negotiation Window Ajar, Military Pressure Also Ramps Up
US Secretary of State Marco Rubio stated on Sunday that Washington remains open to talks with Tehran, a signal that was initially interpreted by the market as a glimmer of de-escalation. Meanwhile, Iranian Interior Minister Eskandar Momeni visited mediating country Pakistan, demanding Islamabad continue its mediation role, suggesting diplomatic channels are not completely closed.
However, beneath the facade of peace, the intensity of military confrontation has not diminished but increased. The US military confirmed that it had completed the 11th round of overnight strikes on targets inside Iran early Wednesday, primarily destroying aircraft hangars and drone storage facilities. Iran, in turn, has intensified harassment of US assets in the Gulf, expanding targets to military posts in Bahrain, Kuwait, and Jordan. Adding to energy market jitters, Iranian forces attacked two oil tankers attempting to transit the Strait of Hormuz, while Yemen's Houthi rebels announced a maritime blockade on Saudi Arabia, with the conflict spreading to multiple points.
Energy Inflation Cloud Hovers, Fed Rate Hike Expectations Rise
Oil Prices Surge to Monthly High, Rate Hike Probability Climbs to 88%
The transit risk in the Strait of Hormuz, a global energy choke point, has directly pushed crude oil prices to their highest level since June 12. The surge in energy costs is rekindling market anxiety over imported inflation, which may force the Fed to stick to its hawkish monetary policy stance as price pressures reignite.
The CME Group's FedWatch Tool shows that traders estimate an 88% probability of at least one more rate hike by the Fed before year-end. This expectation has significantly boosted US Treasury yields, increasing the opportunity cost of holding non-yielding gold and thus capping upside for gold prices.
OCBC Bank analysts pointed out that gold is more likely to exhibit a "two-way oscillation" pattern under the current macro environment, with any rebound meeting stubborn resistance. They believe that for gold to achieve a more sustained recovery, three preconditions need to be met: a significant drop in oil prices, a moderate decline in real yields, and a cooling of Fed tightening expectations. Until then, gold's upside potential will remain constrained.
Technical Analysis: $4,100 Level Becomes Short-Term Bull-Bear Watershed
Gold Technical Analysis: 200-Period MA Poses Key Test
From a 4-hour chart technical perspective, if gold can effectively break above the 38.2% Fibonacci retracement level of the decline from mid-June (corresponding to the $4,120 integer mark) during the day, the short-term bullish signal would be further strengthened. Current momentum indicators are robust, with the 14-day Relative Strength Index (RSI) rising to near 72, approaching overbought territory; the Moving Average Convergence Divergence (MACD) remains in positive territory above the zero line, indicating buying momentum has not yet exhausted.
However, bulls should remain cautious, as a more sustainable upward structure requires the gold price to consistently close above the 200-period Simple Moving Average (SMA, currently around $4,138) on the 4-hour chart.
On the upside, if gold successfully breaks above the 200-period SMA resistance, the next target would be the 50.0% Fibonacci retracement level ($4,170), then challenge the 61.8% Fibonacci retracement level ($4,220). On a larger scale, the 78.6% Fibonacci level ($4,282) and the previous cycle high of $4,382 form the medium-term final target area for bulls.
On the downside, near-term support levels are the $4,100 mark, the 38.2% retracement ($4,120), and the 23.6% Fibonacci level ($4,059). If these supports are broken, gold may retest the $4,000 mark again, or even accelerate lower toward the structural low near $3,943.
Conclusion
In summary, the current gold market is caught in a web of multiple forces: geopolitical risks provide safe-haven support for gold prices, but energy-driven inflation pressures reinforce the Fed's rate hike expectations, thus capping gold's upside. Investors should closely monitor developments in the Middle East, oil price movements, and the Fed's monetary policy signals. On the technical side, the 200-period MA at $4,138 is a key resistance for bulls to overcome, while $4,100 is the short-term bull-bear watershed. Until macro and technical factors become clearer, gold is more likely to remain in a range-bound pattern, awaiting new catalysts to break the balance.
