Geopolitical Escalation: Gold Drops Below $4,100

Summary:

Market expectations for a Federal Reserve rate hike have risen significantly, with the probability of a 25-basis-point hike in July rising from 20% the previous week to 40%, while the probability of a hike in September has climbed to 80%.

BUY XAUUSD

EXP

TRADING

4035.90

Entry Price

4600.00

3600.00

4054.27 +4.75 +0.12%

0.0

Pips

Flat

3600.00

Exit Price

4035.90

Entry Price

4600.00

Fundamentals

On the geopolitical front, risks continue to escalate. U.S. President Trump has publicly stated that he is seriously considering resuming major military operations in Iran and emphasized that the U.S. military is fully prepared for this; he also claimed that any damage caused to ships, cargo, or related assets will be compensated from Iranian funds currently held and controlled by the United States. In response, the Iranian military and the Islamic Revolutionary Guard Corps countered by stating that they are prepared with multiple contingency plans to counter a U.S. ground invasion and other scenarios. Tensions in the Strait of Hormuz remain high, and the risk of geopolitical confrontation in the Middle East is rising sharply.

Data from the U.S. Department of Labor shows that for the week ending July 18, initial jobless claims across the states fell by 22,000 to 187,000, marking the lowest level since September 1969. These figures indicate that the U.S. labor market remains resilient, providing the Federal Reserve with room to further tighten monetary policy. Coupled with stronger crude oil prices that day, market concerns that rising energy prices could exacerbate inflationary pressures have prompted the Federal Reserve to focus more intently on controlling prices.

Technical Analysis

On the four-hour chart, the Bollinger Bands are beginning to narrow, moving averages are diverging downward, and the MACD fast and slow lines are oscillating near the 0 line. The RSI stands at 43, indicating strong market pessimism. On the daily chart, the Bollinger Bands are narrowing, moving averages are flattening, and a trend reversal could occur at any moment. The RSI stands at 43, suggesting that market sentiment is predominantly bearish. However, gold is approaching the bottom range, so the strategy is to buy on dips.

Geopolitical Escalation: Gold Drops Below $4,100_1

Geopolitical Escalation: Gold Drops Below $4,100_2

Trading Recommendation

Trading Direction: Buy

Entry Price: 4030

Target Price: 4600

Stop-Loss Price: 3600

Support Levels: 3900, 3600, 3500

Resistance Levels: 4200, 4300, 4600

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Geopolitical Escalation: Gold Drops Below $4,100

Risk Disclosure