In the Asian trading session on Thursday, gold (XAU/USD) jumped back into the spotlight. After a four-day losing streak, buyers returned with vigor. This change in momentum may be a herald of better days ahead for the storied precious metal. It’s currently being propelled by a depreciating U.S. dollar and an increasing desire for safe-haven investments by buyers.
This recent price action has set up Gold to be able to break higher towards key resistance levels. If the rally persists, analysts predict Gold could aim for $4,058 to $4,060. The $4,075 area is a hot zone with the 38.2% Fibonacci retracement level converging perfectly with it. The psychological barrier of $4,100 isn’t too far beyond reach either.
The market seems wary to shoot higher with major support levels still in play. The short-term support for Gold can be witnessed around the $3,950 region. A firm break beneath this level, especially below the $3,886 level, would open Gold prices up to a greater bearish failure. If this dire scenario were to develop, the $3,850-$3,845 band would be the first major stop and likely target for additional drops. If the bearish pressures do persist, look for important support levels. They can touch at about $3,800 and just under between $3,765 and $3,760.
Negative Technical indicators on the daily chart have started to gain negative traction. Further up, any advance might attract selling pressure around the $4,000 level. This makes it critical to keep an eye on oscillators for reversal warning indicators. Meanwhile, the 100-hour Simple Moving Average (SMA) is hovering around the $4,016 mark. This line always is important for determining speculative mood in the near term.
Today’s outlook for Gold is closely tied to changes in the value of the U.S. dollar. When the dollar weakens, gold tends to be a natural benefactor and an attractive alternative asset. This trend is increasingly the case even during times of economic uncertainty. Gold benefits from safe-haven demand during times of sharp market volatility and geopolitical conflict. This behavior only enhances Gold’s status as the ultimate hedge against inflation and currency devaluation.
Recent gold price movements are indicative of the larger trend underway. Most are becoming rightfully alarmed about U.S. monetary policy and its effects on market liquidity. As central banks navigate inflationary pressures while considering interest rate adjustments, Gold’s role as a non-yielding asset becomes even more pronounced.