Gold outlook: Monday's sharp fall was likely a positioning for fresh push higher

XAU/USD

Gold bounced strongly on Tuesday, recovering a part of heavy losses on Monday, when the metal price first hit new record high and then fell over 5%,

Markets were awaiting a catalyst for profit-taking and yesterday’s optimistic tones about Ukraine peace talks from President Trump, sparked a sharp sell-off.

Despite that initial optimism about peace agreement was very short-lived (as situation escalated the same day) gold price entered a free fall, to end day $250 lower.

From the short term perspective, Monday’s drop was big and undermined near-term bullish structure, but on the larger picture, the move was small correction of larger and steep uptrend (the yellow metal was up nearly 70% in 2025) and likely to mark positioning for fresh push higher.

Fundamental situation, which was the main driver of metal’s price, remain unchanged or deteriorating (escalation in Ukraine, new tensions over Venezuela, some African countries, Middle East and Taiwan), are likely to add fresh support to migration into safety, as well as strong physical buying by the central banks that keeps overall focus at the upside.

Monday’s fall found firm ground just above $4300 (round-figure /daily Kijun-sen), with subsequent bounce cracking $4400 (psychological /Fibo 38.2% of Monday’s $4550/$4302 pullback), though firm break here is needed to generate fresh bullish signal and reduce still existing downside risk.

Daily studies remain bullishly aligned (14-d momentum is still in positive territory and most of MA’s in bullish setup) that supports scenario.

Markets await tonight’s release of Fed minutes, to get more clues about central bank’s stance on monetary policy and expected action in coming months (prevailing expectations are for more rate cuts, particularly due to weakening labor sector and expectations that new Fed Chair will be more compliant with President Trump’s idea of strong easing of the monetary policy) which may provide stronger tailwinds to the bullion’s price.

However, I expect the downside to remain vulnerable as long as price stays below $4400 zone (former strong support, reverted to resistance), but do not see deeper drops on the horizon, as long as overall situation remains with current parameters.

Res: 4400; 4425; 4465; 4492.

Sup: 4350; 4323; 4300; 4241.