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

Following the signing of a memorandum of understanding between the United States and Iran on June 23, which will reopen the Hormuz Strait and ease earlier restrictions on oil delivery, gold and silver were trading somewhat more quietly. Long-term supports for both metals can counteract any short-term drop in demand for risk-driven safe havens. In order to reduce exposure to conventional currencies and debt instruments, central banks continue to make sizable net purchases as part of the reserve diversification of developing market central banks. Production of gold and silver is still low compared to historical peaks, while industrial fabrication usage of solar, electronics, and semiconductors is still high for silver. After a significant drop from $4,364, the peak of the swing low, gold spot is around $4,130 on the 2-hour chart, with bearish continuation candles challenging the blue pivot zone near $4,170. Even though the price has remained above the pivot zone thus far, the existence of a string of lower highs suggests greater dispersal. During the most recent lows, there were rejection wicks, suggesting an effort to absorb the sell pressure. The volume profile indicates that the $4,170 to $4,200 range is the next support zone to keep an eye on, and the RSI has dropped below 45, signaling further waning momentum. As long as the price stays below $4,222, the overall picture is neutral to negative. A declining trend line is still present around $4,282, which could offer resistance. For those looking to trade a counter-trend stabilization or reversal, the blue pivot zone still presents buy possibilities despite the overall downturn. Following the loss of support at an internal trendline and the 200-day moving average two weeks prior, gold caused the breakdown of a long-term rising trendline on Wednesday. The next lower target zone, which was defined by the 127.2% Fibonacci extension of the previous rise near $3,927, was then somewhat below but still close to the new trend low of $3,959 that was established during that session. Gold experienced a narrow range day in the lower half of Wednesday's trading range on Thursday, following the decline with consolidation. The median of a declining channel that served as a support zone during the previous low at $4,023 two weeks ago is close to the 127.2% extension. Additionally, there was a previous swing low of $3,886 in October. When taken as a whole, these signs create a more expansive support zone between around $4,023 and $3,886. As a result, a drop below $3,959 still appears likely. A break below Thursday's low of $3,966 would be a little earlier indication of deterioration. However, traders are expected to retreat and test those areas as resistance over several timeframes and at various scales, given that major support has been breached. For instance, Thursday's high of $4,044 tested the previous trend support from two weeks ago. Naturally, the most important resistance test would take place close to the rising trendline. After a test of resistance levels is over, a bearish continuation is expected since the break of the trendline was verified by a daily close below it, confirming the continuation of the larger decline. For now, the trendline might be represented by Wednesday's lower daily high of $4,115. Overall, the breakdown of long-term support supports the more general change in momentum, where gold has moved from a corrective phase into a growing bearish continuation structure due to the loss of important technical levels.