On analyzing the movements of the gold futures amid changing geopolitical equations, I find that despite a bumpy move by the gold futures on Monday, above the immediate resistance at $3444, selling spree soon the gold futures tested the next significant resistance at $3379, drag down the bulls back to the levels from where this move started from $3405 where the gold futures are teetering on Tuesday after testing the day’s high at $3422.
Undoubtedly, such wobbly moves are the result of fresh developments in the Israel-Iran war, as well as a potential ceasefire amid uncertainty over U.S. involvement in this war since U.S. President Donald Trump has warned that “everyone should immediately evacuate Tehran,” escalated concerns despite the denial by the White House’s clarification that the U.S. will not participate directly in this conflict.
I anticipate that the movements of the gold futures look evident enough to remain bearish as the quantum of damage could be fatal for both Israel if they continue to escalate this conflict despite repeated requests from other nations, including the U.S., to resolve this at the earliest date through dialogues.
Though Washington was still seeking dialogue with Tehran after the cancellation of nuclear talks, scheduled over the weekend, some reports confirm that both U.S. and Iranian officials are still looking to set up talks on a ceasefire and the nuclear deal this week. However, the possible date is still not clear.
Technical Levels to Watch
In the daily chart, gold futures are heading to test the immediate support at 9 DMA at $3382 on Tuesday due to extended selling pressure since the gold futures tested a recent peak at $3470 this Monday and could keep this slide this week if the current situation calms down a little.
Undoubtedly, if the gold futures find a breakdown below the second support at 20 DMA at $3366 on Tuesday, and sustain below this on Wednesday, the next target will be at the 50 DMA at $3312 during this week.
Undoubtedly, if the gold futures find a sustainable move below the 50 DMA this week, weakness will persist as this will throw the gold futures in a sliding channel where the gold futures could test the next support at 100 DMA at $3135 during the next week.
Inversely, any bouncing move by the gold futures from the current levels will provide a good opportunity to the bears to load fresh shorts above the significant resistance at $3444 with a stop loss at $3494 but the need of the hour is to remain extremely cautious with an eye over the developments on Iran-Israel conflict.
Disclaimer: Readers are advised to take any position at their own risk as this analysis is based only on the observations.