Gold Price Update: XAU/USD Rebounds After Sharp Decline to $2,364.19 Amid Economic Concerns and Middle East Tensions
- US economic health worries and Middle East tensions fuel risk aversion.
- Treasury yields drop, boosting US Dollar against Gold.
- XAU/USD corrects from critical support level with downside risk remaining.
Financial markets faced significant volatility as risk aversion took hold at the start of the week. The price of Gold (XAU/USD) tumbled to $2,364.19 before bouncing back to trade around $2,400, still down for the day. The US Dollar strengthened against Gold due to concerns over the US economy and escalating tensions in the Middle East.
Fears of a US recession were sparked by recent economic data, leading to speculation about a potential interest rate cut. Additionally, conflicts between Israel and Hamas raised worries of a full-blown war, causing panic in the markets.
Stock markets in Asia, Europe, and the US all saw declines, with the Nikkei 225 experiencing its second-largest drop ever. However, the release of positive ISM Services PMI data in the US helped stabilize markets to some extent.
Gold received some support as Treasury yields fell, but the overall outlook remains bearish for XAU/USD. The technical analysis shows that while Gold found support at the 61.8% Fibonacci retracement level, indicators suggest further downside potential.
Short-Term Technical Outlook for XAU/USD
The 4-hour chart indicates limited upside potential for XAU/USD, with technical indicators pointing towards a possible continuation of the downtrend. Support levels are at $2,388.70, $2,372.90, and $2,366.00, while resistance levels are at $2,411.20, $2,424.10, and $2,438.80.
Overall, the current economic concerns and geopolitical tensions are driving market volatility and influencing the price of Gold. Investors should closely monitor the situation and consider the potential impact on their portfolios.