Gold (XAU\/USD) rebounded on Tuesday, trading near $4,087 after touching an intraday low around $4,042, as reports pointed to a possible reopening of the Strait of Hormuz. Separate media coverage suggested an announcement could be imminent, though there was no official confirmation. The shift in risk tone pushed the US Dollar and crude lower, with WTI sliding towards $75.50, its weakest level in three weeks. Softer energy prices fed through to lower US Treasury yields, reinforcing support for non-yielding gold. In rates pricing, the CME FedWatch Tool showed the probability of a September Fed hike easing to 57.1% from 67.2% a day earlier.<\/p>\n
US JOLTS Job Openings fell to 7.359 million in June from 7.594 million and came in just under the 7.4 million consensus, while markets now focus on ADP on Wednesday and NFP on Friday. Technically, XAU\/USD is holding above the 21-day SMA at $4,062, but remains well below the 100-day SMA, placed at $4,407. Momentum gauges were mixed, with RSI near 49 and MACD marginally positive. Resistance levels sit at $4,100 and $4,200, while support is near the current area, then $4,062 and $4,000.<\/p>\n
We recommend that derivative traders adopt a cautious, range-bound strategy for Gold (XAU\/USD) over the coming weeks as geopolitical tensions in the Strait of Hormuz show signs of easing. With WTI crude slipping to a three-week low near $75.50 and the US Dollar weakening, the immediate upward pressure on global inflation is cooling. We should look to exploit this consolidation phase rather than chasing aggressive breakout strategies.<\/p>\n
With the Relative Strength Index (RSI) hovering at a neutral 49 and prices consolidating near $4,087, we suggest deploying delta-neutral options strategies, such as iron condors, to capture premium decay. Alternatively, we can establish bull put spreads with a short strike set just below the key 21-day Simple Moving Average at $4,062, or near the stronger psychological support at $4,000. Historically, gold tends to find solid institutional buying pressure when retracing to its 21-day moving average during multi-month consolidations.<\/p>\n
We must closely monitor the upcoming ADP employment change and Nonfarm Payrolls (NFP) reports to adjust our interest-rate sensitive positions. Following the decline in JOLTS job openings to 7.359 million, another weak labor reading could push the probability of a rate hike well below the current 57.1%. Historically, a 10% drop in rate hike expectations can trigger a swift 1.5% to 2% rally in non-yielding assets like gold within a 48-hour window.<\/p>\n
For futures traders, we advise setting tight stop-loss orders just above the immediate horizontal resistance of $4,100 to protect against sudden geopolitical reversals. If diplomatic overtures fail and the Strait remains blocked, a sudden spike back toward the longer-term 100-day SMA at $4,407 remains a distinct possibility. We should keep leverage ratios modest until official confirmation regarding the shipping lane is released.<\/p>\n\n\n\n