Gold prices could decline further as both fundamental and technical pressures increase, according to Saxo Bank

Gold Market Faces Mounting Pressure Amid Global Uncertainty

The gold market is currently experiencing significant turbulence, as technical setbacks and changing economic conditions are overshadowing its traditional role as a safe-haven asset. Ongoing conflicts involving the U.S., Israel, and Iran have intensified global supply chain disruptions, further complicating the outlook for gold.

Ole Hansen, who leads Commodity Strategy at Saxo Bank, has been closely monitoring gold’s 50-day moving average, which hovered just below $5,000 per ounce. This critical support level was breached during early European trading on Wednesday, sending gold prices to their lowest point in six weeks.

Recently, spot gold was valued at $4,888 per ounce, marking a decline of over 2% for the day.

Many gold investors are feeling frustrated, as the precious metal has not managed to sustain its safe-haven demand, even as instability in the Middle East escalates.

Beyond technical factors, Hansen also pointed out that gold is contending with several short-term fundamental challenges.

“The ongoing conflict’s effect on energy markets has pushed inflation expectations higher, just as central banks remain cautious about loosening monetary policy. Rising oil and diesel prices have diminished the likelihood of imminent rate cuts and, in some cases, have led markets to anticipate interest rates staying elevated for longer. This environment has bolstered real yields, which poses a significant obstacle for non-yielding assets like gold,” Hansen explained.

He also observed that heightened geopolitical risks are prompting investors to shift capital into U.S. dollar assets, creating competition for gold’s safe-haven status.

These inflationary pressures and economic uncertainties are unfolding as the Federal Reserve concludes its latest policy meeting. While markets largely expect interest rates to remain unchanged, there is concern that the Fed may reinforce its neutral stance, suggesting rates could stay steady for an extended period. According to the CME FedWatch Tool, the likelihood of rate cuts before the end of summer is now seen as very low.

Hansen emphasized that the conflict with Iran represents a supply-driven inflation shock, which limits the central banks’ ability to respond effectively to the associated risks.

“This combination of persistent inflation and limited policy options creates a challenging environment for gold in the near term,” he noted.

He further stated that, under these circumstances, gold’s technical setup is likely to contribute to increased volatility and further short-term declines.

“Gold has been a highly popular and profitable investment in recent years, supported by central bank purchases, geopolitical hedging, and concerns about currency devaluation. The recent drop below key technical thresholds has triggered momentum-based selling, and the broader risk-off sentiment is prompting investors to liquidate profitable positions to raise cash,” Hansen said.

Silver Also Under Pressure

Hansen pointed out that silver is also facing downward pressure, with prices slipping below $78 per ounce—a four-week low—indicating further downside risk.

Currently, spot silver is trading at $77.13 per ounce, reflecting a 2.5% decrease for the day.

“Silver is not only following gold’s decline but is also more vulnerable to shifts in economic growth expectations due to its industrial applications. Copper prices have also dropped sharply today. Fears that higher energy costs will dampen global economic activity are adding to the pressure, and silver’s greater volatility and exposure to speculative trading are intensifying the downturn during corrections,” Hansen explained.

Key Support Levels to Watch

Looking ahead, Hansen mentioned on social media that he sees initial support for gold around $4,840 per ounce, with the next significant level near $4,660 per ounce.