Gold moves in a short-term downtrend
Gold prices ended last week’s trading at $4,018 per ounce after a session that saw limited recovery at the close. However, the precious metal recorded its second consecutive weekly loss, weighed down by persistent uncertainty in global markets.
According to a report issued by Dar Al Sabeek, escalating tensions between the United States and Iran, rising energy prices, and growing expectations that the US monetary policy would remain tight were the most significant factors pressuring gold prices last week.
The report noted that although investors turned to gold as a safe haven amid widening military tensions in the Middle East, higher oil prices revived fears of a return to inflationary pressures. This strengthened market bets on keeping interest rates at elevated levels for longer, thereby limiting gains in the yellow metal.
It added that the US dollar received additional support last week as continued economic data confirmed the resilience of the US economy, alongside comments from several Federal Reserve officials who emphasized that inflation remains above target levels and that raising interest rates remains an option if prices do not see further declines in the coming months.
Consumer confidence data in the US showed improvement in July, supported by lower fuel prices, while short-term inflation expectations declined. However, these indicators were insufficient to change market expectations regarding the continuation of tight monetary policy.
Technically, the report stated that gold remains in a short-term downtrend, despite its success in reclaiming the $4,000 per ounce level by the end of last week. It indicated that selling pressure will persist unless the metal breaks through resistance levels between $4,125 and $4,175 per ounce. The report pointed out that $4,000 represents the first support level, followed by $3,959 and then $3,900. A break below these levels could extend the downward wave toward $3,886 per ounce.
It added that investors’ attention this week is focused on several key issues, foremost among them the ongoing geopolitical developments in the Middle East, which have become the primary driver of oil and gold prices, as well as financial markets.
Investors are also awaiting the earnings reports of several major global technology companies, which will provide important indicators on the strength of the tech sector and the continued momentum related to investments in artificial intelligence technologies.
The report confirmed that local prices continue to move in line with a set of key factors, including global gold prices, US dollar movements, interest rate expectations, oil prices, and geopolitical developments that exert a direct impact on global market trends.
It forecast that gold’s performance in the coming period will depend on the trajectory of tensions in the Middle East, US economic data, and central bank signals regarding the future of monetary policy—factors that will determine market direction in the coming weeks.
