FPG Caisheng International: Gold Price Rebound, Multiple Factors at Play

On March 31, FPG Caisheng International monitored that international gold prices slightly rose on Monday, market expectations for interest rate hikes eased, combined with bargain buying entering the market, pushing gold prices to halt their decline and rebound, while currently gold is experiencing the most severe monthly correction in nearly twenty years.

Analysts at OCBC Bank believe that this round of gold price rebound is more of a technical correction. Since the outbreak of conflict in Iran in late February, gold prices have sharply declined. Currently, the bearish momentum is gradually weakening, with the relative strength index rising from oversold territory, indicating short-term selling pressure has eased. However, the institution also warns that the sustainability of the gold price rebound is doubtful. Key resistance levels for spot gold are concentrated at $4,624, $4,670, and $4,850 per ounce. Only by effectively breaking through and stabilizing above these levels can a more sustained upward trend be confirmed; otherwise, gold prices are likely to remain weak and volatile. FPG Caisheng International believes that high energy prices are an important disturbance factor, potentially boosting inflation expectations and driving U.S. Treasury yields higher, which continues to suppress non-yielding assets like gold. In the short term, gold prices will fluctuate between interest rate expectations and geopolitical risks.

The statement from Federal Reserve Chair Jerome Powell has become a key short-term variable. He stated that long-term inflation expectations are “well-anchored” and there is no need to adjust policies due to short-term oil price surges. This comment cooled market expectations for rate hikes, providing slight support for gold prices. Data from the CME shows that after Powell’s speech, market bets on Fed rate hikes this year have decreased, and the marginal easing of rate expectations has alleviated valuation pressure on gold. However, FPG Caisheng International also reminds that uncertainties from geopolitical conflicts are still increasing. Attacks by Houthi forces and Trump’s tough threats against Iran could trigger energy supply disruptions, which may again push inflation and rate hike expectations higher, making short-term rebounds in gold unlikely to reverse.

FPG Caisheng International summarizes that the current gold market is at a critical juncture where bullish and bearish forces are intertwined. Technical rebounds, slight adjustments in rate expectations, and escalating geopolitical risks are competing. Investors should closely monitor U.S. Treasury yields and developments in the Iran conflict, manage trading strategies amid volatility, and rationally allocate gold assets.