What Happened
Gold (XAU/USD) fell sharply on Friday, shedding more than 2.30% as fears grew that a prolonged conflict between the US and Iran could trigger a second wave of inflation. If inflation resurges, central banks โ including the US Federal Reserve โ may be forced to lift interest rates again, which would hurt gold by making yield-bearing assets more attractive. XAU/USD traded at $4,551 after touching a session low of around $4,511.
Key Levels
- Support 1: $4,511 โ Friday’s intraday low, the first line of defence for buyers.
- Support 2: $4,450 โ a broader technical floor where buyers previously stepped in.
- Resistance 1: $4,620 โ near-term ceiling before the sell-off accelerated.
- Resistance 2: $4,680 โ the area bulls need to reclaim to signal recovery momentum.
Technical Picture
The sharp 2.3% single-session drop is a bearish signal. Gold was trading well above its 50-day moving average heading into this week, but Friday’s sell-off has brought price closer to key short-term support. RSI (Relative Strength Index โ a momentum gauge from 0โ100) has pulled back from overbought territory above 70, suggesting the prior rally was extended and a deeper pullback is possible.
What Traders Are Watching
All eyes are on the $4,511 session low. A daily close below this level could open the door to a test of $4,450. On the upside, a recovery back above $4,620 would suggest the dip is being bought and short-term bulls are regaining control. Any escalation or de-escalation in US-Iran tensions will be the key macro trigger to watch over the weekend.
Bias
Bearish short-term. The inflation-and-rate-hike narrative is working against gold right now. Until geopolitical risk translates into genuine safe-haven demand rather than rate-hike fears, the path of least resistance is lower.
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