FX.co ★ Fixy | XAU/USD, GOLD

Gold prices fell by nearly 2% at the start of the week, coinciding with the release of crucial US non-farm payrolls data, which severely impacted the key psychological and technical support level around $4,200. This sharp decline completely erased the previous rally and significantly damaged the risk zone around $4,240. Factors driving prices down included escalating geopolitical tensions, renewed inflation fears, a strong dollar, and rising US Treasury yields. Over the weekend, tensions in the Middle East intensified further with a direct attack by Yemen's Houthi rebels on Riyadh, the capital of Saudi Arabia, adding to the concerns. Meanwhile, diplomatic tensions between the US and Iran persisted. Iran recently announced that it is awaiting a clear response from the US to its seven-day ultimatum, which includes reopening the Strait of Hormuz and other non-negotiable conditions. Although Axios reported that President Trump rejected Iran's latest ultimatum, he still intends to resume negotiations with Iran this week. Trump expressed confidence in achieving victory in the conflict soon, paving the way for further military strikes before the upcoming midterm elections. These geopolitical conflicts continue to drive up global oil prices, reviving concerns about persistent inflation and prompting investors to seek refuge in the dollar. Furthermore, market expectations of a hawkish stance from the Federal Reserve have exacerbated this macroeconomic situation. CME Group’s FedWatch tool shows that market participants currently expect a 66% probability of the Fed raising interest rates as early as October. For gold, which is characterized by low yields and high sensitivity to the dollar, this strong expectation of monetary tightening and the resulting safe-haven flows have created significant downward pressure. Looking ahead, there is relatively little economic data forthcoming, meaning that potential progress in US-Iranian negotiations and broader geopolitical developments in the Middle East will remain the primary drivers of gold prices. However, market volatility is expected to increase as traders brace for a series of key US labor market data releases starting Tuesday, with Friday’s non-farm payrolls report being the most anticipated. Additionally, speeches from Federal Reserve policymakers will be closely watched for further clues about the central bank’s future monetary policy direction following its recent shift toward hawkishness.

Technically, the daily chart shows a clear downtrend. The asset is currently trading near the $4,200 level and has continued to decline significantly below key moving averages, including the 100-day simple moving average ($4,299.28), the 50-day simple moving average ($4,321.41), the 21-day simple moving average ($4,344.16), and the 200-day simple moving average ($4,540.68). Meanwhile, the Relative Strength Index (RSI) stands at 38.82, indicating continued weak market momentum rather than oversold conditions. On the upside, initial resistance is centered around the 100-day simple moving average (SMA) near $4299.28, followed by the 50-day SMA and a break below the descending trendline near $4327.36, forming a strong selling zone. Further resistance will be found near $4519.20 and the 200-day SMA. Conversely, if selling pressure intensifies and the price falls below the short-term psychological level of $4200 and the lower boundary of the current descending wedge, the descending structural resistance will quickly move to the potential uptrend support around $3998.89 and $3990.07, at which point the market structure will clearly shift in favor of sellers.