Gold (XAU/USD) rebounded from an Asian session dip to a multi-day low and climbed back above the $3,300 mark in the final hour of trading. While the precious metal found support from ongoing geopolitical risks—including the Russia-Ukraine conflict, tensions in the Middle East, and the India-Pakistan border—the upside potential remains constrained. Optimism stemming from the US-UK trade deal and the resumption of US-China tariff negotiations over the weekend is limiting further gains for gold.
US Dollar Strength and Trade Optimism Weigh on Gold
Hopes that the US will secure additional trade deals have eased recession concerns, further supporting the US Dollar (USD). Additionally, the Federal Reserve’s hawkish stance, signaled by its pause on Wednesday, has lifted the USD to its highest level in nearly a month. This strengthens the US Dollar, which typically weighs on non-yielding assets like Gold.
Markets are now awaiting speeches from influential Federal Open Market Committee (FOMC) members for further clues on the Fed’s rate policies, which may add additional pressure on Gold. Despite this, XAU/USD is on track to post modest weekly gains, marking a potential turning point after two weeks of declines.
Geopolitical Risks Provide Some Support for Gold
In terms of geopolitical developments, both Russia and Ukraine reported attacks on their forces on the first day of a unilateral ceasefire declared by Russian President Vladimir Putin. Meanwhile, Israel’s conflict with Iran-backed Houthis in Yemen and fears of broader military conflict along the India-Pakistan border keep the geopolitical risk narrative alive, continuing to offer support for safe-haven assets like Gold.
Technical Outlook for Gold
From a technical perspective, the breakdown below the $3,300 mark and the $3,260 support-turned-resistance favors bearish momentum for Gold. However, daily chart oscillators, while showing a loss of strength, have yet to confirm a strong negative bias. This suggests that traders should proceed with caution before anticipating deeper losses. Gold could find some support around the $3,265-$3,264 zone. A sustained sell-off below this area could open the door to a further decline towards the $3,223-$3,222 region, with the next level of support potentially around the $3,200 zone.
On the other hand, the $3,324 level, which marks the high of the Asian session, acts as a near-term resistance. If Gold manages to break above this, further selling could cap the price near the $3,360-$3,365 static resistance. A strong move beyond this level would allow Gold to retake the $3,400 mark and potentially aim for the next resistance near $3,434-$3,435.
Outlook for the Week
Gold’s price movement is likely to be influenced by the evolving geopolitical landscape and developments in US-China trade talks. With a mixed technical outlook and external factors in play, Gold is expected to maintain a cautious range, though geopolitical risks could provide sporadic support.
