RHB Research has maintained its negative trading bias on gold and advised traders to keep their short position after COMEX gold broke below the US$4,150 support level, with the research house seeing potential downside towards US$4,000.
Spot gold, however, rose 0.7% to US$4,143.87 an ounce as of 7.08am GMT on Tuesday, recovering from a more than seven-week low hit in the previous session. US gold futures gained 0.2% to US$4,175.10.
RHB said COMEX gold fell sharply on Monday, opening at US$4,279.70 before sliding to an intraday low of US$4,113.10 and closing at US$4,136.40.
The research house said the latest bearish candlestick and a declining Relative Strength Index indicated that downward momentum was accelerating after the support breakdown.
RHB maintained its short position initiated at US$4,284.80, based on the Sept 23 close, with a stop-loss at US$4,400. It revised the first support level to US$4,000, followed by US$3,800, while resistance was lowered to US$4,300 and then US$4,400.
Meanwhile, broader market sentiment remained sensitive to developments in the Middle East and expectations for US interest rates.
US and Iranian officials were holding separate discussions with mediators in a renewed effort to end the seven-month war. However, oil prices continued to rise, raising concerns that persistent energy costs could keep inflation elevated.
Markets are pricing in a 70.3% probability of a Federal Reserve rate hike in October, up from 57.6% a week earlier.
Fed Governor Lisa Cook has also warned of continued inflationary pressure from AI-related demand and higher oil prices, although she stopped short of saying further rate hikes would be necessary.
Higher interest rates and yields tend to weigh on gold by increasing the opportunity cost of holding the non-yielding asset.
Among other precious metals, spot silver fell 0.1% to US$60.91 an ounce, platinum declined 1% to US$1,700.40 and palladium eased 0.4% to US$1,209.26.
