FX.co ★ Retired-Mogambo | XAU/USD, GOLD

Following the positive US jobs report, the price of gold (XAU) fell on Friday and ended the week below the crucial breaking zone of $4,500. Concerns about rate hikes were heightened by the good jobs figures because the global oil crisis continued to raise the possibility of inflation. Gold was under additional pressure due to the recovery in oil prices. The deepening of the Middle East crisis raised inflation forecasts and drove up WTI and Brent oil. The Fed may decide to maintain high rates or raise them if pricing pressures continue as a result of the increased inflation. The US dollar and US Treasury yields increased as a result of the increased inflation forecasts, which also increased pressure on the price of gold and silver (XAG). After creating a price compression between the 50-day and 200-day SMAs, the price of gold broke below $4,350. A significant short-term decline toward the $4,000 region has been made possible by this breakout. However, the $4,200 to $4,250 range continues to be the minor support. We already talked about the crucial decision-making range between $4,400 and $4,500. Following the robust jobs report, this zone broke last week. Consequently, a short-term negative trend has been made possible by this breakthrough. Using the 4-hour chart, the gold market's short-term price action also reveals the collapse below $4,350. The price dropped below $4,350 and failed to break above $4,520. Prior to the primary target of $4,000, the 4-hour chart also displays the immediate support of the $4,250 to $4,200 level. A move to the 50-day EMA at the critical $4600 range may be possible if we can break above the 200-day EMA, which is providing some resistance above. It makes sense that traders continue to value that area since it has been both support and resistance on several occasions. But right now, the US interest rate markets are the most important thing to keep an eye on. Having said that, I monitor the 10-year yield to determine the direction of the market. Gold will be under pressure if the 10-year yield begins to increase again, but it did roll over a little early after first creating some issues. Even though the Iranians and Israelis are firing missiles at one another, the Americans appear to be unwilling to get involved. And if that's the case, we might be closer to peace or, at the very least, non-escalation—than most people realize, which could lower interest rates. We'll have to wait and see, but at the moment, trading gold—or many other commodities, for that matter—requires examining the interest rate markets. The gold market will drop to $4200 if those rates increase. If we break to the upside, I believe we may view this through the lens of declining interest rates, which would make a non-yielding asset like gold slightly more alluring. As the spot stays below the major moving averages on the daily chart, XAU/USD continues to have a bearish near-term tone. While the Average Directional Index, which is about 28, indicates a reasonably formed downtrend rather than a volatile selloff, the Relative Strength Index (RSI), which is near 34, shows weak momentum creeping toward oversold conditions. A daily closing above the 200-day Simple Moving Average (SMA) at $4,436 would be necessary to relieve immediate selling pressure on the upside. The next obstacles appear at the 50-day SMA near $4,624 and the 100-day SMA near $4,793, where the medium-term bearish structure would probably be contested if buyers are able to prolong a rebound. The next significant cushion on the downside is located at the horizontal support zone around $4,100, where a break would allow for larger losses.