Gold (XAU/USD) trades lower on Thursday, snapping a four-day rally. Price action is exploring levels below $4,100 at the time of writing, following a rejection at $4,165 on Wednesday as the surge in Oil prices, with the Brent barrel trading above $90.00, has reactivated concerns about higher inflationary risks, sending US Treasury yields to fresh highs, and posing a heavy weight for precious metals
Analysts at TD see the recent Gold recovery as a corrective reaction, likely to be short-lived, as the move "does not seem to be an aggressive extension of long positions, but is rather driven by short covering and dip buying, after technical supports held during the preceding selloff."
Looking ahead, TD Securities experts observe that "there are no fundamental reasons to think that the US rate and FX environment will be conducive to increasing long gold exposure any time soon." In their view, "it is likely that the Middle East war-driven oil price increases will continue to increase the probability of a Fed rate hike," limiting the scope for a more durable upside extension for Gold.
XAU/USD trades at $4,087.60, holding a constructive near-term bias although the 4-hour Relative Strength Index is nearing the 50 midline, which, together with the bearish cross of the Moving Average Convergence Divergence (MACD) line, suggests that bulls have given up and sellers are taking back control.
On the downside, immediate support is seen at the reverse trendline now around $4,005, followed by the year-to-date lows at the $3,940 area. Furhter down, the late October 2025 low just below $3,900 emerges as the next target. Rallies, on the other hand, are expected to meet significant resistance at the $4,200 area, where bulls were capped in late June and early July. This area needs to give way to confirm a deeper recovery, aiming for mid-June highs at the $4,385 area.