Gold Price Forecast: XAU/USD battles to retain the positive momentum

XAU/USD Current price: $5,300

• The Middle East crisis boosted demand for safety, sending Gold beyond $5,400.
• Upbeat American data helped to improve the market mood during US hours.
• XAU/USD filled the weekly opening gap, holds at around $5,300.

Spot Gold soared to $5,419 on Monday, as risk aversion took over financial markets. The United States (US) and Israel unleashed military attacks on Iran early on Saturday, resulting in the killing of the country’s Supreme Leader, Ayatollah Ali Khamenei. Tehran answered in all force, striking US bases in different Gulf countries, including the United Arab Emirates, Qatar, Kuwait, and Saudi Arabia.

Market players rushed into safety, with the US Dollar (USD) firming against most major rivals, while Gold grabbed momentum vs the Greenback. The tide turned after the release of upbeat US data, resulting in XAU/USD shedding over $100 per ounce.

S&P Global released the final estimate of the February Manufacturing Purchasing Managers’ Index (PMI), confirming it at 51.6, up from the flash estimate of 51.2. The ISM Manufacturing PMI for the same period was 52.4, slightly below the 52.6 posted in January but better than the 51.8 anticipated by market participants. The ISM report also showed that the Employment Index improved to 48.8 in February, while the Prices Paid Index, the inflation component of the survey, jumped to 70.5 from 59 in January.

Encouraging US data also helped Wall Street, with the three major indexes bouncing from intraday lows, with the Nasdaq and the S&P500 trading in the green at the time being.

Still, crossfire in the Middle East is likely to continue in the upcoming weeks, and the market sentiment can easily deteriorate, reviving Gold demand.

XAU/USD short-term technical outlook

In the 4-hour chart, XAU/USD corrects lower. The near-term bias is mildly bullish as price holds comfortably above the rising 20-, 100-, and 200-period Simple Moving Averages (SMAs), with the short-term average clustered near $5,245 and the longer ones down toward $5,080 and $5,000, reinforcing a positive underlying trend. The Momentum indicator eases, but remains above its midline, while the Relative Strength Index (RSI) indicator stabilizes around 58, but is still heading lower, reflecting the slide without hinting at lower lows ahead.

In the daily chart, XAU/USD retains its positive momentum. The near-term bias is bullish as price remains above the rising 20-, 100- and 200-day Simple Moving Averages (SMAs), keeping the broader uptrend intact despite recent volatility. Meanwhile, technical indicators maintain their upward slopes within positive levels, in line with higher highs ahead.

Initial support emerges at the 20-period SMA in the 4-hour chart around $5,245, where a pullback would test the integrity of the current upswing, followed by deeper support at the 100-period SMA near $5,080. A break below these levels would expose the 200-period SMA around $5,000 as a more strategic floor. On the upside, immediate resistance is near the recent high at around $5,420, and a sustained break above this area would open the way to record territory.

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