Gold prices (XAU/USD) struggled to gain traction during the Asian session on Monday, hovering near a three-week low touched last Friday. This stagnation arises from mixed market forces: while expectations that the Federal Reserve (Fed) will cut rates later this year—bolstered by signs of easing inflation in the United States—are undermining the US Dollar (USD), persistent geopolitical risks continue to offer some support to the safe-haven asset.
However, gold’s upside potential remains limited due to a generally positive risk sentiment and hopes for a ceasefire in Gaza. Traders appear cautious, opting to await key US macroeconomic data releases this week, including Friday’s Nonfarm Payrolls (NFP) report. Additionally, significant central bank decisions, such as the Bank of Canada (BoC) on Wednesday and the European Central Bank (ECB) on Thursday, are expected to impact the non-yielding yellow metal.
Technical Analysis: Potential for Further Decline if $2,320 Support Fails
From a technical standpoint, gold could face further declines if it decisively breaks below the $2,320 support level. Such a move would confirm a breakdown through the 50-day Simple Moving Average (SMA), potentially leading to deeper losses. Daily chart oscillators are beginning to show negative momentum, suggesting that gold prices might fall below the $2,300 mark, testing the next support zone around $2,285-$2,284.
Conversely, any upward momentum beyond the $2,343-$2,344 range is likely to encounter significant resistance near the $2,360 region, last Friday’s high. Continued buying above $2,364 could trigger bullish sentiment, pushing gold prices towards the $2,385 intermediate hurdle and possibly reaching the $2,400 mark. Further gains could extend towards the $2,425 zone and potentially the $2,450 region, nearing the all-time high touched in May.
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