Gold fell below key technical levels during Monday’s Asian trading session, as concerns over inflation driven by higher energy prices amid the U.S.–Israel and Iran conflict continued to weigh on sentiment, especially with geopolitical tensions showing no clear signs of easing.

Market caution ahead of this week’s Federal Reserve meeting also added pressure to gold prices, as investors worry that the central bank may maintain a hawkish stance while inflation remains persistent.

Spot gold dropped to $4,968.21 per ounce at 01:23 GMT. Meanwhile, the conflict involving Iran continued to escalate after the U.S. and Israel carried out strikes on a key export port over the weekend, prompting Tehran to issue strong threats of retaliation.

However, since the conflict began, gold has generally underperformed. The metal’s traditional safe-haven appeal has been partly overshadowed by concerns that interest rates may stay higher for longer, as the war-driven energy price shock risks adding further pressure to global inflation.

Technical Analysis: The corrective scenario remains dominant

From a technical perspective, there have not been many significant changes. Over the past week, gold has continued to show that the corrective downward trend remains the dominant scenario.

Based on the wave structure, we can currently place gold within two possible corrective cycles.

In the first scenario (GOLD#1), this may only be a short-term correction. Under this view, gold is correcting from yellow T1 down to yellow L1, with an internal white a–b–c wave structure. Once L1 is completed, the market may quickly return to its upward trend with the formation of T2, thereby pushing gold toward new higher levels.

In the second scenario (GOLD#2), the market may be entering a medium-term corrective cycle with a longer duration and more complex price action. In this case, gold is moving through a correction from yellow T2 down to yellow L2. The most common wave structures in this phase are usually A-B-C or A-B-C-D-E, with relatively unpredictable swings along the way.

The two key factors that will help determine which scenario is more likely are the ending position of wave C and the bullish structure that forms after wave C is completed.

In the short term, downside momentum is still considered dominant until price approaches the key support zone around $4,910–$4,930/oz. Notably, this area also aligns with the EMA50 on the daily timeframe. Since November 2022, this moving average has consistently acted as support for gold’s long-term uptrend, although the market has occasionally produced false breakouts before moving back above it.

Conclusion

At this stage, the corrective trend remains the higher-probability scenario, as gold has not yet shown a clear reversal signal. The $4,910–$4,930/oz zone will be an important support area to watch in the coming sessions.

Price action around this zone will be crucial in determining the market structure. If buying pressure emerges and holds this support area, gold may quickly resume its upward trend. On the other hand, a break below this support could open the door to a deeper correction before the long-term trend is re-established.

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