Gold Price Forecast: XAU/USD buyers are losing the battle

XAU/USD Current price: $4,540

• The conflict between the United States and Iran maintains markets in risk-off mode.
• Government bond yields soared amid fears rising inflation will twist central banks’ hands.
• XAU/USD bounced from fresh lows, risk skews to the downside.

XAU/USD bottomed at $4,480 at the beginning of the week, its lowest since late March, as a dismal market sentiment fueled demand for the US Dollar (USD). The focus remains in the Middle East, and weekend headlines indicate that the United States (US) and Iran are still far from a deal that can result in the end of the Oil war. As a result, crude oil prices soared, with the barrel of West Texas Intermediate (WTI) jumping above $100.

Meanwhile, government bond yields also soared, with the yield on the 10-year Treasury note hitting 4.63%, its highest since last February, as concerns for a long-lasting inflation shock fueled speculation that central banks will have to raise interest rates.

Throughout the day, headlines regarding Washington-Tehran relations hinted at little progress. On the one hand, Iran claimed that US demands are still excessive despite recent changes, while announcing it was looking for a long-term truce and the reopening of the Strait of Hormuz.

On the other side, A US senior official noted the White House considers the latest Tehran proposal insufficient for a deal. There were some additional headlines from Tasnim news indicating that the US accepted lifting Iran’s oil sanctions during the negotiation period, according to a source close to the negotiation.

Financial markets remain in risk-off mode in the mid-American afternoon, with Oil prices flirting with daily highs and the Greenback retaining most of its early gains, reflecting prevalent concerns.

XAU/USD short-term technical outlook

In the four-hour chart, XAU/USD trades with a clear bearish near-term bias as it holds beneath the 20-period Simple Moving Average (SMA) at $4,618.67, the 100-period SMA at $4,642.86, and the 200-period SMA at $4,695.82. The downside pressure is reinforced by a deeply negative Momentum indicator, and by the Relative Strength Index (RSI) indicator maintaining its downward slope near 31.

Bigger time frames also skew the risk to the downside, as technical readings in the daily chart hint at lower lows ahead. The pair holds below the 20-day SMA at $4,648.69 and the 100-day SMA at $4,790.66. The metal still trades comfortably above the 200-day SMA at $4,352.64, too far to be relevant in the upcoming sessions. At the same time, technical indicators resumed their slides after correcting oversold conditions, with the RSI holding near 40.

On the topside, initial resistance is aligned with the 20-period SMA around $4,618, followed by the 100-period SMA and the 20-day SMA, both around $4,645. Below the recent low at $4,480, the next leg lower could extend towards $4,400.

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