$4,000: The last relevant support for Gold

Gold trades in a dull fashion at the beginning of a new week, hovering around $4,170. Demand for the precious metal remains subdued despite the persistent dismal market mood. On the one hand, news coming from the Middle East pushes further away the odds of a peaceful resolution of the ongoing conflict that maintains Oil prices near multi-year highs. On the other hand, persistent energy inflation hints at tighter monetary policies ahead, and investors anticipate the United States (US) Federal Reserve (Fed) will have no choice but to deliver another interest rate hike before year-end.

Investors usual concerns about the Middle East war and the Fed’s monetary policy will have one more thing to worry about this week: earnings reports. Multiple companies will deliver their Q3 performance reports in the upcoming days, including major banks.

But banks are probably less of a concern among market participants, who continue to worry about AI developments. Massive investment in the sector has decelerated amid fears it has gone too far. Earnings reports could bring some serious noise to stock markets these days.

Risk aversion alongside odds for additional interest rate hikes in the US maintain the US Dollar (USD) on the winning side. The Greenback appreciates on thin Monday trading and is likely to maintain its strength ahead of critical US data. The country will release the September Consumer Price Index (CPI) on Wednesday, expected to print at 3.7% YoY following the 3.4% posted in August. Core annual CPI is forecast at 2.5%, up from the previous 2.4%.

Speculative interest is not only concerned about inflation being above the Fed’s 2% preferred level, but also about the continued pressure of energy prices on consumer spending.

XAU/USD Technical Outlook

The XAU/USD pair has remained confined to a tight range since late September and trades not far from its October low at $4,066, but the bearish stance is clear, and the $4,000 level seems the last psychological barrier. Buyers have surged on approaches to the region, but fresh bottoms have been resulting in lower highs in the last two weeks, a sign buyers are losing conviction.

The near-term picture is neutral, as the 4-hour chart shows XAU/USD trading below the 100-period Simple Moving Average (SMA) at $4,208.56 and the 200-period SMA at $4,298.69, while a mildly bullish 20-period SMA at $4,159.27 provides near-term support. The same chart shows that the Relative Strength Index (RSI) indicator hovers near 49, while the Momentum (14) indicator also stands at around 51, reflecting the ongoing consolidation.

In the daily chart, however, XAU/USD extends its slide below the 20-, 100-, and 200-day SMAs clustered between roughly $4,225 and $4,528. The alignment of price under all these reference averages hints at lower lows ahead, while the Relative Strength Index (RSI) at 43.23 and the negative Momentum suggest lingering downside pressure.

On the topside, initial resistance emerges at the 100-period SMA near $4,208.56, with a subsequent barrier at the longer-term 200-period SMA around $4,298.69, where selling interest could reassert the broader cap. On the downside, the 20-period SMA at $4,159.27 stands as first support ahead of the mentioned $4,066 bottom. Beyond the latter, Gold can extend its slide to $3,959, where XAU/USD set its monthly low in July.

(The technical analysis of this story was written with the help of an AI tool. Know more.)