XAU/USD outlook: Gold may take a breather above bear-channel support line to position

XAU/USD

Gold remains firmly in red on Monday and hit 2 ½ month low on Monday, in extension of Friday’s 3.2% drop (the biggest daily loss since March 19).

Upbeat US May jobs data added to growing Fed rate hike expectations while fresh escalation in the Middle East fuels inflation.

Friday’s break of 200DMA (which recently contained several attacks) and Fibo support at $4401 (61.8% of $4099/$4889 upleg) generated strong bearish signal and opened way for today’s attack at bear-channel support line ($4305), where bears faced headwinds.

Near-term action may slow here, due to significance of support, as well as partial profit taking after Friday’s heavy losses.

Upticks are likely to be limited and provide better selling levels, as overall technical picture is bearish and strong post-NFP rise in bets for Fed rate hike fuels demand for dollar and keeps the yellow metal under pressure.

Broken 200DMA ($4432) offers solid resistance (as falling 10DMA is approaching and on track to form 10/200DMA death-cross) which should ideally cap upticks.

Firm break of bear-channel support line should further strengthen bearish structure for attack at key support at $4099 (2026 low, posted on Mar 23).

Only bounce above $4500 zone (former strong support, now resistance) would sideline bears.

Res: 4366; 4401; 4432; 4500.
Sup: 4305; 4285; 4200; 4099.