Yesterday, the market continued to witness an extremely strong sell-off in Gold, causing it to drop more than 360 points from 4863$/ounce to the 4500$/ounce level within just one day, while Oil prices continued to reach the 100$/barrel mark.
However, reassurance later emerged in the market as the UK and other countries are making efforts to ensure the safe passage of oil tankers through the Strait of Hormuz. The market reacted immediately, with Oil prices pulling back, supporting capital flows returning to Gold and helping it recover to the 46xx$/ounce range.
This morning in the Asian session, Gold continued a positive rebound, approaching the 4700$ level. However, amid ongoing tensions in the Middle East with no significant developments, Gold is likely to struggle to rise strongly again and may continue to face selling pressure if Iran proceeds with plans to attack oil tankers and oil and gas facilities in the region.
Therefore, this rebound is likely just a technical recovery as investors buy the dip around 4500$. In the short term, Gold may continue to decline toward the 4400$ level, or even further to 4000$/ounce, while Oil prices could rise again toward the 125$/barrel mark.
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