Upon evaluating the moves of the since the beginning of last week, I observed that the gold futures experienced a strong reversal from key supports, which is a technical bounce amid renewed tensions between the U.S. and Iran this week.
Undoubtedly, after a steep fall of approximately 21.34% in three trading sessions, dip-buying is in play after an over $1,000 price wipeout last week.
I observe that this reversal by the gold futures, after testing the lows below the significant support at the 50 EMA ($4,569.59), have already formed a bearish formation (three outside crows) too in a daily chart, raising skepticism over this rebound seen on Wednesday and Thursday, despite the emergence of this bearish signal, futures are hanging at the 9 EMA ($4,968).
Although the gold futures surged approximately 6.65% on Wednesday, currently below the immediate resistance at $5,144.77, they could try to pierce this resistance. However, the next resistance at $5,213.30 could trigger a selling spree, as only a sustainable move above this level will validate the strength of the reversal.
Iran has tentatively agreed to resume nuclear talks with the United States as it tries to avert the threat of further military strikes, in what would be the first such negotiations since the Trump administration bombed three of Iran’s nuclear sites last summer.
The discussions are expected to be held in Istanbul on Friday, where Iran’s top diplomat, Abbas Araghchi, is likely to meet US special envoy Steve Witkoff and Jared Kushner, the son-in-law of US President Donald Trump.
However, I find that currently prevailing uncertainty will continue up to Friday, till the outcome of this meeting, and any positive outcome could once again repeat last Friday’s selling spree, once again while if this meeting ends without any solid outcome, some sell off could be there.
Undoubtedly, press secretary Karoline Leavitt has already told reporter Tuesday that Trump is keeping open the option of military strikes if diplomacy fails, while Iranian President Masoud Pezeshkian has also explained that Tehran is pursuing negotiations, though with conditions.
I hardly expect any solid outcome from this meeting, which is extremely dependent on conditional talks, but despite that, if both parties reach at mid-way to resolve this issue, big bears will command the scenario in precious metals.
While having a look at the current position of spot gold and (XAU/XAG) ratio in a daily chart, indicating some exhaustion despite trading at the significant support at 57.56 could surge upward to test the immediate resistance at 59.93 where a breakout will result in extensive selling pressure on gold futures as the inverse correlation between them indicates the next directional move in advance.
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Disclaimer: Readers are advised to take any position in gold at their own risk, as this analysis is based only on observations.
