FX.co ★ XAU/USD, GOLD

The Spot prices showed signs of softening early on Monday, trading near $2,630 during the first few hours of U.S. market activity. The primary factor behind this pullback was the strengthening U.S. dollar (USD), which exerted downward pressure on the yellow metal. However, despite the short-term weakness, the downside for gold may be limited due to expectations of a potential interest rate cut by the U.S. Federal Reserve (Fed) in September. Geopolitical Tensions and Investor Sentiment: The ongoing geopolitical tensions, particularly the lack of progress in ceasefire negotiations between Israel and Hamas, continue to affect market sentiment. Investors are becoming more risk-averse, which in turn is boosting demand for safe-haven assets like gold. The uncertainty surrounding the situation is likely to cap the downside for gold prices, as risk-averse investors turn to the metal as a store of value. Technical Analysis of Gold: Price's immediate support is found at $2,621, where it recently reached a low. If prices dip below this level, they could fall further to $2,604, the low from the previous week. Should the decline continue, the next key support is the 50-day Exponential Moving Average (EMA) at $2,651, which could help stabilize the price and act as a technical barrier.

After hitting a peak above $2,650, XAU/USD reversed course and formed a “bearish engulfing” candle pattern on the daily chart. This pattern signals the potential for further declines. Additionally, the Relative Strength Index (RSI), a key momentum indicator, is showing signs of bearishness, with the RSI nearing a drop below its neutral level.