Gold Price Forecast: XAU/USD eases further as markets aim to stabilize

XAU/USD Current price: $2,388.23

• Financial markets are looking to stabilize, but fears persist.
• A firm recovery in government bond yields backs US Dollar’s gains.
• XAU/USD extends slide within Monday’s range, aims for lower lows.

XAU/USD extends Monday’s losses and trades in the $2,380 price zone as markets abandon panic. On the one hand, stocks are in better shape after collapsing at the beginning of the week, with United States (US) indexes trading in the green after mixed results among their overseas counterparts. The better tone of equities undermines demand for Gold.

On the other hand, government bond yields recovered, with the 10-year Treasury note yield up over 20 basis points (bps) after falling to fresh multi-year lows, supporting the US Dollar against the bright metal. Nevertheless, market players are still concerned about the United States (US) economic health and maintain bets on massive interest rate cuts before year-end.

XAU/USD short-term technical outlook  

XAU/USD trades around the 50% Fibonacci retracement of its June/July rally at $2,388.70, and technical readings in the daily chart show that the risk is skewed to the downside. The pair met intraday buyers around the 38.2% retracement of the same run at $2,411.20, while the 20 Simple Moving Average (SMA) converges with the mentioned level, losing its bullish strength. Technical indicators, in the meantime, head south within negative levels, in line with a downward extension.

In the near term, and according to the 4-hour chart, the bearish case is even stronger. Technical indicators resumed their slides within negative levels and after correcting oversold conditions. At the same time, the 20 SMA gains downward traction well above the current level, while XAU/USD keeps putting pressure on a mildly bullish 200 SMA.

 Support levels: 2,372.90 2,366.00 2,352.40

Resistance levels: 2,411.20 2,424.10 2,438.80