FX.co ★ XAU/USD, GOLD

Fundamental Analysis of Gold (XAU/USD) Gold opens the week with a bullish gap and is trading near $3,905 , a bounce that follows one of the sharpest sessions of the year . On Friday, spot gold fell more than 3.5% to about $3,880, while silver tumbled more than 6% to $48.95. The cause was a cash squeeze rather than a loss of faith in the metal: a Wall Street technology sell-off forced investors to liquidate positions, and demand for liquidity beat demand for safe havens even though Treasury yields fell, with the 10-year at 4.93%. The damage was technical as well , since gold cleared the $3,900 threshold for the first time since October of last year and had already broken the ascending trend line that stretches back to the October 2023 lows. Monday's rebound got a lift from the energy market, because oil corrected on progress in talks to end the US-Iran conflict. Still, the recovery faces a policy ceiling, as expectations of a US rate hike remain and a December move is still being debated, raising the cost of holding a metal that pays no yield. Gold now trades far below its peak, with a 52-week range of 3,870.17 to 5,595.46. Traders also face event risk, including the US midterm elections on Tuesday, so the gap may not be trusted until buyers prove they can defend it. 1-Hour Chart Analysis The 1-hour chart shows gold climbing out of Friday's close near $3,875 and holding above the opening gap. Price at $3,905 is above both the 5 EMA and the 20 EMA; the 5 EMA is a little above the 20 EMA, and both are turning up from the lows, which gives the intraday trend a mild bullish tilt. The gap zone between $3,875 and $3,890 is now the first test for buyers, and the 20 EMA near $3,890 sits right on top of it. As long as hourly candles stay above that area, dips look like normal pullbacks. A close below $3,885 would mean the gap is being filled, and it would put the $3,870 low back in play. Above, the first hurdle is $3,950, followed by the $3,971 to $3,982 band, where analysts see a chance for sellers to return. A clean hourly close above $3,982 would open $4,000. A practical idea is to buy a pullback to the 20 EMA with a bullish candle, placing the stop below $3,865 and targeting $3,975. Because gaps often attract quick retests, avoid chasing the first spike, and keep position sizes small after such a violent move.

4-Hour Chart Analysis The 4-hour chart shows the bigger picture, and it is still bearish. Price is trading below the 20 EMA, which has dropped steeply toward $3,960, and the 5 EMA sits beneath it, an alignment that reflects the collapse from above $4,000. The daily chart agrees, since gold remains beneath all major referenced bands and the 100-day SMA. That makes the bounce a corrective test until proven otherwise. A 4-hour close above the 20 EMA and above $4,000 would be the first sign that sellers are losing control, and it would open the way to $4,100, the immediate resistance level cited by analysts . The upper band at $4,074 to $4,083 is another area where rallies may stall. On the downside, support lies at $3,885, then the $3,870 year low, and a close below it would expose $3,800, which analysts see as the next support. Below that, the $3,700 round number would be the next target. The RSI is oversold after Friday's drop, so a larger relief rally is possible, but oversold readings can last a long time in forced-selling markets. Swing traders may prefer to wait for a 4-hour close above $4,000 before buying, or sell a rejection near $3,975 with a stop above $4,010 and a target at $3,885.