Gold Price Forecast: XAU/USD holds gains above $4,100 undaunted by risk-off markets
- Gold hits resistance at the $4.140 area but remains steady above $4,100.
- Geopolitical tensions and higher oil prices have failed to dent Gold's recovery.
- XAU/USD bulls are likely to be challenged in the area between $4,140 and $4,200.
Gold (XAU/USD) extends gains for the fourth consecutive day on Wednesday, standing comfortably above $4,100, unfazed by the risk-off market amid rising tensions in Iran and higher Oil prices. The pair has rallied nearly 2.5% so far this week and is on track for its best weekly performance in more than three months.
The precious metal has shown some hesitation on Wednesday's European session, amid concerns that the US-Iran war might escalate out of control as US President Donald Trump threatened to strike nuclear facilities, which, according to Tehran, will extend the conflict throughout the region.
Apart from that, news reports that three Saudi Arabian Oil tankers have turned around in the Red Sea following the Houthis’ announcement of a blockade boosted Oil prices higher, providing additional support to the US Dollar, which has been closely correlated to Crude prices since Iran’s war started.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
Technical Analysis: Resistances at $4.140 and $4,200 are likely to challenge bulls
XAU/USD trades at $4,120, holding a bullish immediate bias after breaching the downward trendline resistance from late May highs. The bullish momentum is supported by the 4-hour Relative Strength Index (14), which hovers in the mid-60s, and the positive Moving Average Convergence Divergence (MACD), which together suggest buyers retain control.
Upside attempts, however, remain capped below the July 9 high, near $4,140, which, together with the July 3 high, at the $4,200 area, are likely to test bulls' confidence. Further up, the next target is the mid-June highs, at the $4,360 area.
On the downside, immediate support is seen at the broken trendline break zone around $4,020 ahead of the year-to-date lows around $3,950. Further down, the late October 2025 low just below $3,900 emerges as the next target.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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