Gold Price Forecast: XAU/USD turns bearish and could test $2,600

XAU/USD Current price: $2,633.56

• Hopes for a cease-fire between Israel and Hezbollah boosted the mood.
• Demand for safe-haven assets backs the US Dollar vs the bright metal.
• XAU/USD gains bearish traction, aims to test the $2,600 price zone.  

Spot GOLD trades around $2,630, having shed roughly $30 after Wall Street’s opening. The bright metal has been under selling pressure since early in Asia, maintaining a sour tone as the day comes to an end. XAU/USD fell despite the broad US Dollar’s weakness, as a better market mood pushed investors away from safe-haven assets.

Investors welcomed headlines indicating a cease-fire agreement between Israel and Hezbollah is very close, according to the Israeli ambassador to the United States (US). Authorities are expected to announce on Tuesday a 60-day cease-fire, with hopes that it could be resolved in such a pause.

 Demand for the Greenback increased in the last Monday’s session, helped by the solid performance of US indexes and encouraging US data. The country reported that the Chicago Fed National Activity Index was down a modest 0.4 in October, following an upwardly revised -0.27 in September. At the same time, the November Dallas Fed Manufacturing Business Index posted -2.7, slightly better than the previous -3.

The focus this week will be on the US Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve's (Fed) favourite inflation gauge, which will be published on Wednesday. The country will release alongside the second estimate of the Q3 Gross Domestic Product (GDP).

XAU/USD short-term technical outlook

The daily chart for XAU/USD shows the risk skews to the downside. The pair accelerated south after breaking below a now bearish 20 Simple Moving Average (SMA), while technical indicators turned sharply lower within negative levels after failing to overcome their midlines. The 100 and 200 SMAs maintain their upward slopes, with the shorter one currently at around $2,563, a critical support level in the upcoming sessions.

In the near term, and according to the 4-hour chart, XAU/USD is also at risk of extending its slide. The pair fell below all its moving averages, with the 100 SMA gaining downward momentum at around $2,655. Finally, technical indicators head firmly south within negative levels without showing signs of bearish exhaustion.

Support levels:  2,626.10 2,611.35 2,598.70

Resistance levels: 2,640.40 2,655.00 2,671.55