Gold outlook: Key $4K support zone at risk again on worsening geopolitical situation

Slobodan Drvenica Windsor Brokers

XAU/USD

Gold edged lower after opening with $20 gap lower on Monday, following the latest escalation in the Middle East that fueled inflationary risk and added to expectations that the Fed will keep higher interest rates or possibly opt for rate hikes, providing support to US dollar.

Markets also focus on this week’s key economic data – release of US June inflation report and Fed Chair Warsh’s semi-annual testimony on economy, inflation and monetary policy that will add fresh details on overall outlook.

Technical studies on daily chart remain in mainly bearish configuration, following several death-crosses formed during June (20; 30; 55 / 200DMAs), 14-d momentum holding in negative zone and RSI below 50).
Fresh weakness after recent recovery stall, shifts near-term focus to the downside, with initial requirement on weekly close below Fibo support at $4076 (where bears were rejected four times) guarding key supports at $4000/$3950 (psychological / recent spikes below $4K), with firm break here (after a multiple failure) to generate bearish continuation signal of larger downtrend from new historical high.

At the upside, falling 20DMA marks first significant resistance ($4118), ahead of pivotal barrier at $4203 (July 6 recovery peak).

Res: 4118; 4183; 4203; 4288.
Sup: 4021; 4000; 3942; 3886.

Author

Slobodan Drvenica

Windsor Brokers

Industry veteran with over 22 years’ experience, Slobodan Drvenica joined Windsor Brokers in 1995 when he was an active trader for more than 10 years, managing the trading desk and own account departments.

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