29.06.202610:07 Forex Analysis & Reviews: Gold is Losing Ground Again, Failing to Properly Recover

Gold prices are declining again today, down 1.1 percent to $4,062 per ounce. This follows a rise of more than 2 percent over the previous two sessions when the attack on a Qatari oil tanker in the Strait of Hormuz briefly revived the geopolitical premium. However, as soon as the US and Iran agreed to cease mutual strikes and resume negotiations this week, the metal turned downward once more. The logic remains the same and well-known. De-escalation and cheap oil reduce inflation expectations and pressure on rates, and with them, support for gold fades.

Since the start of the war in late February, the metal has lost over 23 percent. This is a dramatic reversal for an asset traditionally considered a safe haven. The reason is clear and has been described many times. The war has driven energy and inflation; inflation has forced central banks to keep rates high, and high rates are suppressing the non-yielding metal more strongly than geopolitical fears can support it. US inflation data has only solidified this picture. Although the PCE was high, it fell within forecasts, giving gold no new reason for growth.

Interestingly, the metal's behavior is beginning to change, which is an important observation. The ability of gold to hold above $4,000 even amid renewed tensions in the Strait indicates that buyers are returning on dips and are ready to defend this level. All this suggests that gold is becoming increasingly resilient to Middle Eastern volatility, especially now that it has completely erased gains from the beginning of the year, and speculative traders focused on quick movements have largely switched to other assets. In other words, hot money has exited gold, leaving more long-term and patient holders at current levels.

This observation echoes what I wrote earlier when major banks massively slashed their forecasts. Goldman Sachs and Deutsche Bank have lowered their targets, ceasing to factor in a Federal Reserve rate cut this year; however, even their revised benchmarks still imply growth from current levels. Currently, the main fundamental bearish factor is the strong dollar and high rates, and as long as the Fed maintains a hawkish stance—validated last week by Williams, Goolsbee, and Barkin—gold will struggle to turn upward.

In the short term, the fate of the metal appears to hinge on the $4,000 mark. If this level holds, recovery can be expected. If it breaks downward, the path to deeper correction will open.

Silver is falling more aggressively today, down 2 percent to $58.99, while platinum and palladium are also in the red.

Regarding the current technical picture for gold, buyers need to reclaim the nearest resistance at $4,062. This will allow targeting $4,124, above which it will be quite challenging to break through. The furthest target will be around $4,186. In the event of a decline, bears will try to take control of $4,008. If they succeed, breaking this range will deal a serious blow to bulls' positions, pushing gold to a low of $3,954 and potentially reaching $3,906.