Strait of Hormuz blockade pressures Gold to a daily drop

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Gold slides 1.64% today to $4,402.76

Highlights

The Strait of Hormuz blockade since late February has disrupted global energy supplies, driving oil prices higher and stoking inflationary fears.
Worries about sanctions and trade uncertainty have pushed central banks to add gold reserves, but gold faces selling pressure as interest rate expectations climb.
Gold trades below key moving averages, with weak momentum signals; price is expected to move sideways between $4,347.88 and $4,484.01, with a higher probability of downside.

Inflation risks and central bank buying as geopolitical tensions persist

The blockade of the Strait of Hormuz since late February has caused major disruptions in global energy supply, leading to higher oil prices and fueling inflationary concerns. These developments have contributed to increased expectations for prolonged higher interest rates, which have diminished gold's appeal as a non-yielding asset. Additionally, central banks have expanded their gold reserves in response to rising sanctions risks and uncertainty in global trade, reflecting sustained sovereign demand, though price action has remained under broader selling pressure.

Downward momentum prevails amid resistance and mixed technical signals

Technically, XAU trades below the MA-20, MA-50, and MA-200, emphasizing prevailing downward momentum across short-, medium-, and long-term periods. The Ichimoku Kijun level is established at $4,470.19, acting as immediate resistance. Momentum data show MACD with a Sell signal, ADX remaining Neutral, and RSI also signaling Sell but positioned just below the midpoint. Meanwhile, Stoch RSI and CCI are both Neutral, indicating no clear overbought or oversold conditions, while BBP is classified as Overbought, and the Awesome Oscillator remains Neutral. This range of indicators suggests persistent weakness tempered by pockets of buyer activity.

Range-bound trade expected as downside risk marginally outweighs rebound

In the short term, the price is likely to fluctuate within a volatility band of $4,347.88 to $4,484.01. The probability slightly favors a downside move at 53% versus 47% for an upside move, but the baseline scenario is for consolidation inside this defined range. A bullish breakout above $4,470.19 could spark a broader recovery, whereas a drop below $4,347.88 would risk further losses in the coming days.

Viktoras Karapetjanc, expert at Traders Union, sees persistent macro pressures limiting gold's upside for now. He believes sovereign demand from central banks is supportive, but inflation and tight policy expectations weigh on sentiment. Technicals signal weakness, but the range remains defined. "If XAU can break above $4,470.19, a rebound is on the table, but for now I favor consolidation with a slight bullish tilt on any dips."

Earlier, analysts noted that gold’s outlook was tempered by mixed technical signals and shifting investor demand, leading to a cautious, range-bound scenario. The current environment, defined by heightened geopolitical risks and persistent downside momentum, heightens the importance of monitoring the $4,470.19 resistance for signs of a potential bullish reversal.

Source of Data: XAU Price Analysis by TU

The analysis is based on a proprietary model combining technical, on-chain, and expert data. Not investment advice. See methodology

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