Gold Price Against U.S. Dollar: $5,110
- Market participants continue to buy the U.S. Dollar amid a risk-off environment.
- The Middle East crisis continues to escalate, prompting investors to seek safe haven assets.
- The XAU/USD pair is expected to continue its downward trend in the near term.
Spot gold prices declined sharply on Tuesday, with the XAU/USD pair trading near $5,110 in American afternoon trading after briefly breaching the $5,000 level. Despite the escalating crisis in the Middle East and a prevailing risk-off sentiment dominating financial markets, the precious metal is failing to attract investors. Instead, market activity is flowing towards the U.S. Dollar (USD).
The U.S. Dollar reached an intraday high earlier in the American session, though it later pared some gains, it still maintains substantial appreciation for the day against most major rivals. Global benchmarks remain under pressure, although Wall Street managed to recover from earlier lows. This shift highlights the dollar’s current appeal as a safe haven during geopolitical uncertainty.
The conflict in Iran continues to escalate, leaving little room for a shift in market sentiment. It remains unclear whether investors will continue to favor the U.S. Dollar or turn to the precious metal at some point.
Upcoming U.S. Employment data may provide further clarity. The United States will release the ADP Employment Change report on Wednesday, followed by weekly jobless claims on Thursday and the Non-Farm Payrolls (NFP) report for February on Friday. Disappointing figures could weaken the U.S. Dollar and potentially shift safe-haven demand towards gold.
Short-Term Technical Outlook for the XAU/USD Pair
On the 4-hour chart, the XAU/USD pair exhibits increasing downside potential. The short-term bias has shifted slightly bearish after the price broke below the ascending 20-period Simple Moving Average (SMA) near $5,260, whereas remaining above the 100 and 200-period SMAs, which continue to slope upwards and maintain a broader bullish trend context. The Relative Strength Index (RSI) bounced modestly but remains near 37, while the Momentum indicator maintains its downward slope within negative levels, favoring further declines in the near term.
Immediate resistance appears at the broken 20-period SMA near $5,260 and any recovery attempts below this level will likely keep sellers in control, with a stronger barrier aligning near the recent consolidation zone near $5,330, then the $5,370 region. On the downside, initial support appears around the psychological $5,100 level, aligning with recent price lows, followed by more significant support at the 100-period SMA near $5,095, where a bounce would be consistent with a pullback within a broader uptrend. A clear break below the 100-period SMA would expose the 200-period SMA near $5,020 as the next downside level, where long-term trend followers will gaze for signs of renewed demand.
On the daily chart, the XAU/USD pair tested the resolve of buyers near the ascending 20-day SMA near $5,060, with the 100 and 200-day SMAs continuing to advance away from the market. The Momentum indicator is gaining bearish momentum but remains above the midline, while the RSI is also trending south above the midpoint, tilting the risks towards the downside without confirming new price lows in the future.
(The technical analysis in this story was assisted by an artificial intelligence tool.)
