Gotrade News - Gold prices came under heavy pressure early this week after Iran abruptly re-closed the Strait of Hormuz. Spot gold dropped as much as 1.94% to USD 4,740.2 per troy ounce according to Bloomberg Technoz data on Sunday (20/4).
- Spot gold fell 1.94% to USD 4,740.2 after Iran re-closed the Strait of Hormuz citing Israeli attacks on Lebanon
- Kitco News survey: 80% of Wall Street analysts predict gold will rise, with resistance at USD 4,895.40 and USD 4,950
- Key US economic data this week includes Flash PMI April and Kevin Warsh's confirmation as new Fed Chair
The decline followed escalating tensions across the Middle East that continue to rattle global markets. IDX Channel reported spot gold had earlier fallen 1.43% to USD 4,762.06 per troy ounce late last week.
Spot silver also weakened, dropping 2.52% to USD 79.78 per troy ounce according to IDX Channel data. Negative sentiment toward precious metals broadened as Middle East uncertainty deepened.
Iran Re-closes Strait of Hormuz
The primary catalyst for gold's decline was the volatile situation at the Strait of Hormuz. Iran had briefly reopened the critical shipping lane, allowing a Pertamina International Shipping vessel to pass through.
However, Iran shut the strait again, stating that Israel continued to launch attacks on Lebanon according to Bloomberg Technoz. The reversal dashed market optimism that had briefly emerged when the waterway reopened.
Negotiations between Iran and the United States remain ongoing with no clear outcome, IDX Channel reported. Iran accused the US of violating prior agreements related to Strait of Hormuz access.
The unpredictable geopolitical landscape has created elevated volatility across global commodity markets. Investors have been reducing exposure to risk assets including precious metals in the near term.
Most Analysts Still Predict Gold Gains
Despite strong short-term pressure, a majority of analysts remain bullish on gold's weekly outlook. The Kitco News weekly survey showed 80% of 10 Wall Street analysts predicted gold prices would rise.
On the retail side, 70% of 47 traders surveyed by Kitco also expected gold to climb higher. Only 19% predicted a decline while the remaining 11% took a neutral stance.
Jim Wyckoff, Kitco's senior analyst, set an upside target of USD 5,000 per troy ounce. His downside target stood at USD 4,500 if negative sentiment persists, as reported by Liputan6.
The nearest resistance levels sit at USD 4,895.40 and USD 4,950 based on Kitco's technical analysis. Strong support was identified at USD 4,750 and USD 4,700 as the lower boundary for price movement.
Alex Kuptsikevich from FxPro warned of a potential "buy the rumor, sell the fact" reaction in gold markets. This pattern frequently occurs when market expectations run too high ahead of economic data releases.
Markets are also watching several important US economic releases this week including March retail sales and housing data. Initial jobless claims will provide insight into the strength of the American labor market.
Additionally, Kevin Warsh's confirmation as the new Federal Reserve Chair is drawing global investor attention. April Flash PMI and University of Michigan consumer sentiment data could also move markets, including the S&P 500 (SPY).
