There are signs of a temporary easing in geopolitical tensions. Trump has announced his agreement to engage in two-week ceasefire negotiations with Iran, on the condition that Iran agrees to reopen the Strait of Hormuz “fully, immediately and safely”. Trump stated that the US has achieved all its military objectives, and that the two-week window is intended to finalise a long-term peace agreement covering the majority of resolved points of contention. White House officials have also confirmed that Israel has agreed to this temporary ceasefire arrangement. Iran has accepted the ceasefire proposal put forward by Pakistan, which has been approved by the newly appointed Supreme Leader. It is important to emphasise that these negotiations do not signify an end to hostilities. According to Iran’s position, it will only formally accept an end to the conflict once the 10 ceasefire terms have been adhered to, the “surrender of the enemy” on the battlefield has been transformed into “decisive political outcomes” in the negotiations, and all details have been finally confirmed through negotiations. Consequently, the current ceasefire remains highly fragile, and market concerns regarding potential reversals in the situation have not entirely dissipated. In terms of capital flows in the gold market, holdings of the world’s largest gold ETF—the SPDR Gold Trust—remained unchanged from the previous trading day, currently standing at 1,054.419 tonnes.

The US inflation data for March, due to be released this Friday, represents the next key milestone for the market. Driven by soaring energy prices, the market expects the month-on-month increase in the headline CPI for March to reach 0.9%, the highest level since June 2022, whilst the year-on-year growth rate is forecast to rise from 2.4% to 3.3%. A previous research report by Soochow Securities noted that the rise in oil prices resulting from the ongoing US-Iran conflict has begun to spark market concerns about a second wave of inflation in the US. The minutes of the Federal Reserve’s March meeting, due to be released on Wednesday, are expected to show that the Committee favours a wait-and-see approach amid high uncertainty. The March dot plot showed that seven officials believed there would be no room for rate cuts by 2026, seven believed there would still be one rate cut, and only five believed there was scope for two or more rate cuts. At the post-meeting press conference, Powell characterised the current policy stance as being at the upper end of the neutral interest rate range and explicitly warned that the Fed would not cut rates if there was no substantial progress on inflation. The futures market currently expects the first rate cut to come in September, with only one or two cuts anticipated for the year.

On the four-hour chart, the Bollinger Bands are widening upwards and the moving averages are diverging upwards, indicating that the overall upward trend remains intact. However, whilst prices have reached new highs, the upward momentum bars on the MACD are gradually weakening, which signals a bearish divergence; there is a high probability of a correction in the near future. The RSI stands at 68, indicating that market participants are predominantly buying. On the daily chart, prices have rebounded to the middle Bollinger Band but are facing resistance; if they fail to break through and hold above the middle band, there is a high probability that they will fall back towards the 200-day EMA. The RSI stands at 53, suggesting a strong sense of caution in the market. The recommended strategy is to sell on rallies.

Trading Direction: Sell

Entry Price: 4900

Target Price: 4300

Stop-loss: 5300

Support Levels: 4225, 4100, 4000

Resistance Levels: 5000, 5300, 5600