Gold (XAU/USD) shows moderate gains on Friday, but remains close to the year-to-date lows, at the $3,940 area, with upside attempts capped below the $4,000 psychological level for now.
The precious metal is set for a 3% weekly decline, as the resumed hostilities between the US and Iran and the higher Oil prices have offset the positive impact of lower US Treasury yields
Bullion tumbled on Thursday as tensions in Iran escalated with US President Donald Trump threatening to target civilian infrastructure, like power plants and bridges. Tehran, in turn, flagged the closure of the Strait of Bab el-Mandeb, a move that would strangle Oil supply further and bring the global economy to the brink of recession. Technical Analysis: The YTD low of $3,941 is coming under pressure XAU/USD trades remain on a bearish trend from February’s highs with no clear sign of a trend shift on the horizon, other than the bullish divergence in the Relative Strength Index (RSI).
Momentum indicators in the 4-hour remain in bearish territory, with the mentioned RSI below 40 and the Moving Average Convergence Divergence (MACD) just below zero, suggesting that rallies will find sellers. The psychological $4,000 level is holding bulls at the time of writing, closing the path towards the trendline resistance at $4,075 and mid-July highs in the $4,100 area. A clear break of these levels is needed to ease bearish pressure and shift the focus towards July’s peak, in the $4,200 area.