Gold has weakened sharply during the week by more than 10%, extending a downtrend despite ongoing geopolitical tensions that might normally support safe haven demand. The sharp sell-off reflects rising inflation expectations tied to surging oil prices and fading hopes for near term interest rate cuts, which diminish the appeal of non yielding precious metals. A stronger U.S. dollar and elevated Treasury yields have also pressured bullion, leading many traders to liquidate positions for liquidity or to cover losses elsewhere. As a result, gold remains under pressure in the near term even as broader macro risks persist.
At the start of the week, gold tried to hold the $5K support line, however, for the rest of the week the price dropped sharply, closing the week at $4.491. The RSI reached a clear oversold market side, at the level of 29. The MA50 slowed down its divergence from MA200, however, due to the large distance between lines, the potential cross is still not in the perspective.
As explained previously, gold might remain under pressure due to increasing oil prices and fears of increased inflation which could force central banks to even increase interest rates. Based on current charts, a close below the $4.500 support opened a path toward the next support, around $4.400. There is increased probability that this level might be tested in the coming period. However, some short term reversal is also possible, after the strong drop in the value of gold. In this case, the level of $4.650 might be tested for one more time.