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Gold prices rebounded modestly at week’s end following a correction in market expectations for two anticipated Federal Reserve rate hikes this year. However, the metal continues a four-week downward trend, with traders attempting unsuccessfully to drive prices below the critical $4,000 psychological threshold until easing pressure emerged on Friday afternoon.
Weekly chart analysis reveals persistent selling pressure despite brief recoveries, with long-term technical indicators suggesting further declines. The impending “death cross” formation – where the 50-day moving average is projected to fall below the 200-day moving average – combined with current price positioning below this cross, reinforces bearish momentum. Market participants face a pivotal battle around the $4,000 level, which concurrently serves as both resistance and support from late 2023’s trading ranges.
Shifting market narratives have altered gold’s price dynamics. While earlier volatility stemmed from US-Iran tensions creating inverse correlations between crude oil and precious metals, recent patterns show concurrent declines in both assets. This concurrent movement reflects broader macroeconomic concerns rather than isolated geopolitical factors.
Alternative bullish scenarios propose potential corrections following gold’s three-year rally to Fibonacci retracement levels. Technical projections suggest possible consolidation followed by a V-shaped recovery potentially reaching previous peaks near $5,600, with aggressive estimates targeting $8,000 as an extension of the 161.8% Fibonacci level. However, analysts caution against overoptimism, citing historical patterns of cyclical extremes in gold pricing over the past five decades.
The FxPro Analyst Team
