Triple Logical Game: Gold Price Shows "V-shaped" Rebound Again
Source: Xinhua Finance
Xinhua Finance, Beijing, April 14 – On Monday (April 14), the international spot gold once again experienced a "V-shaped" reversal. The breakdown of U.S.-Iran talks over the past weekend initially suppressed gold prices, leading to a sharp plunge at the open, but prices overall oscillated upwards during the day, and staged a strong rebound during the European and American trading sessions, fully demonstrating the safe-haven resilience of precious metal assets. Currently, demand for gold allocation is gradually rising, with geopolitical issues, energy inflation, and the Federal Reserve's policies forming the triple game that dominates the core logic of gold's current movement.
Specifically, the failure of the U.S.-Iran negotiations over the weekend was the direct trigger for this sharp volatility in gold prices. Affected by this news, spot gold fell more than 2% at the open on Monday. Subsequently, the market gradually digested the negative impact, bullish funds moved in to bottom fish, and gold prices rebounded and regained most of the losses, eventually closing down slightly by 0.2% at $4,740.15/ounce. After opening on Tuesday, gold prices surged by $30, quickly reversing from a deep drop to a strong recovery.
Currently, the ongoing conflict in the Middle East remains a key factor impacting the gold market. As oil prices spike and further boost global inflation expectations, stagflation risks are intensifying. The U.S. one-year inflation swap climbed to 3.168%, and the market's expectation for the future U.S. CPI rise remains high. The rise in energy costs has sharply squeezed the Fed's rate-cutting space. Data from the swap market shows that bets on a Fed rate cut by the end of the year are just about 29%, a significant decline from before.
It is noteworthy that, although a high interest rate environment exerts pressure on zero-yielding gold, inflation-hedging demand has provided a solid floor for gold prices. Meanwhile, the U.S. dollar index fluctuated, turning from gains to losses on Monday and fell for six straight sessions, marking the longest losing streak so far this year. The weaker dollar has directly lowered the holding cost of dollar-denominated gold, offering a strong boost to gold's rebound. Coupled with the slight fall in U.S. Treasury yields and moderate diversion of safe-haven funds, gold's allocation advantage is becoming even more pronounced.
From a technical perspective, the spot gold daily chart showed a long lower shadow candlestick, and multiple technical indicators have signaled a short-term rebound. Downward momentum has weakened significantly, and market sentiment is gradually shifting from panic to cautious optimism. Although gold prices have fallen over 10% since the outbreak of the latest Middle East conflict, gold continues to show strong resilience amidst intertwined risks.
Looking ahead, the trend of gold prices will be highly dependent on the Middle East situation, crude oil prices, and the Federal Reserve's policy directions. In an environment of rising stagflation risks and intensifying geopolitical uncertainties, gold's role as a ballast in asset portfolios is becoming increasingly important, and short-term bullish momentum is steadily accumulating.
(Author: Wang Shenghao, Senior Analyst at Zhongzhou Futures, Investment Consulting Certificate No.: Z0021754)
Editor: Zhu Henan
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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