Gold started the new week on relatively weak footing, though it still managed to recover toward the $4,700 area, marking an intraday high during the first half of Monday’s European session. According to Bloomberg, the United States, Iran, and regional intermediaries are discussing a 45-day ceasefire, which could pave the way toward ending the conflict.

This development has weakened the U.S. dollar, the traditional safe-haven asset, thereby helping gold attract bargain-buying interest around the $4,600 zone. However, the outlook for persistently high global interest rates continues to limit the upside of this non-yielding metal.

Investors now believe that the war-driven rise in energy prices could intensify inflationary pressure, forcing major central banks, especially the Federal Reserve, to maintain a hawkish stance for longer than previously expected.

Meanwhile, the stronger-than-expected U.S. nonfarm payrolls (NFP) report released on Friday showed that the labor market remains resilient, reinforcing expectations that the Fed will keep interest rates elevated for an extended period in order to contain inflation. This factor is supporting the U.S. dollar and continues to weigh on gold prices.

Current price action suggests that caution is still warranted, and that a confirmed break below the $4,600 level is needed before concluding that the rebound from the $4,100 zone the lowest level in four months, set in March has truly come to an end. The market is also awaiting the U.S. ISM Services PMI data for additional direction, amid thinner liquidity due to the Easter Monday holiday across many major markets.

Technical analysis: Gold is being compressed within a narrow triangle range

From a technical perspective, gold remains trading below a key descending trendline (drawn from peak B to t1), which means the scenario of forming wave t2 around the $4,800/oz area is still valid.

However, as mentioned earlier, investors should wait for confirmation that the current structure has been broken especially a break below the support zone before confirming the return of the downtrend and the end of the rebound from the $4,100/oz bottom.

On the other hand, if price gains enough momentum to break above the descending trendline, the bearish scenario would be invalidated, and the bullish scenario mentioned in the previous analysis would become the preferred outlook.

Notably, gold is currently being compressed between the descending trendline and a short-term ascending channel, forming a triangle consolidation pattern. This reflects a market in hesitation, with both buyers and sellers waiting for a clearer signal.

Once this compression is broken, the market will often see a sharp and rapid move in the direction of the breakout.

Conclusion

The market is currently in a phase of indecision, where the price range is narrowing and signals remain unclear. This is not an optimal zone for holding large positions, but is more suitable for observation or short-term range trading.

The $4,600 level is acting as a key support zone, while the descending trendline above remains a critical resistance level. Only when one of these two levels is clearly broken will the market confirm its next direction.

Until such a signal appears, the priority should remain on risk control and patiently waiting for confirmation, rather than trying to predict the breakout direction too early.

Ebila AI continuously monitors market developments closely, combining both fundamental and technical analysis to help investors gain a more comprehensive view and make more effective decisions.