As shown on the XAU/USD chart, the price of gold fell below $3,130 this morning – its lowest level since 10 April.
Since its peak in May, gold has lost more than 8% in value per ounce.
Why Is Gold Falling?
Bearish sentiment in the gold market may be fuelled by easing geopolitical tensions. According to media reports:
→ China and the US have already reported progress in reaching a trade agreement, while details of potential deals with India, Japan, and South Korea are currently being developed.
→ Iran is reportedly willing to sign a nuclear deal in exchange for the lifting of sanctions. In addition, Donald Trump may lift sanctions on Syria during his visit to the Middle East.
→ The situation between India and Pakistan has stabilised, and today, talks between Russia and Ukraine are expected to take place in Istanbul, with a potential ceasefire on the agenda.
These developments could be seen as reducing the appeal of gold as a safe-haven asset.
Technical Analysis of the XAU/USD Chart
In our 7 May gold price analysis, we:
→ outlined a descending channel (marked in red);
→ noted that bearish pressure persisted above $3,400.
Since then, the gold (XAU/USD) price has continued to move within this channel, breaking support around the $3,200 level and approaching a key support zone formed by:
→ the lower boundary of the red channel;
→ a long-term trendline (marked in blue);
→ a former resistance level (highlighted with arrows) at $3,140.
Given these conditions, traders should consider a scenario in which a minor rebound may occur – for instance, towards the median line of the red channel.
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