Market Analysis

Gold price (XAU/USD) encounters some selling pressure near its monthly peak, which was tested earlier this Tuesday, trimming a portion of the previous day's significant gains of over 1%. A generally upbeat sentiment in the equity markets diminishes demand for traditional safe-haven assets, exerting downward pressure on the precious metal amid some repositioning ahead of the closely-watched US inflation data. However, several supportive factors are likely to provide some underlying strength to the commodity, potentially preventing more significant losses.

Investor concerns about the potential for an expanded conflict in the Middle East and the ongoing Russia-Ukraine war may temper market optimism. Additionally, dovish expectations for the Federal Reserve (Fed) have so far failed to boost the US Dollar (USD), which could serve as a tailwind for Gold prices. Therefore, it may be wise to wait for more sustained selling pressure before concluding that the recent upward momentum observed over the past week or so has ended.

Technical Analysis: Gold appears poised to retest its all-time high, with dip-buying expected to limit deeper losses.

From a technical standpoint, the recent breakout above the $2,448-2,450 horizontal resistance level has been seen as a fresh catalyst for bullish traders. Furthermore, daily chart oscillators are gaining positive momentum, indicating that the path of least resistance for Gold is likely upward. Consequently, a potential move back toward challenging the record high around the $2,483-2,484 level seems plausible. This could be followed by a test of the $2,500 psychological barrier, and a decisive break above this level would likely pave the way for further gains.

On the downside, the $2,450-2,448 resistance area now acts as immediate support, with a drop below this level potentially leading to a decline toward the overnight swing low in the $2,424-2,423 range. Further support is seen near the $2,412-2,410 area, followed by the $2,400 round number. A decisive break below this could expose the 50-day Simple Moving Average (SMA) near the $2,376-2,375 region, which is expected to be a crucial pivot point. Continued selling pressure could drag Gold prices down to the late July low around the $2,353-2,352 area, which coincides with the 100-day SMA. Sustained weakness below this level would likely shift the near-term outlook in favor of bearish traders.

Paraphrasing text from "Reuters" all rights reserved by the original author.