Gold Price Forecast: XAU/USD nears the tip of a triangle formation at the $4,000 area
- Gold posts marginal gains on Monday but remains within previous ranges around $4,000.
- Incipient hopes of some de-escalation in Iran have eased risk aversion on Monday.
- XAU/USD approaches the tip of a descending triangle pattern at the $4,000 area.
Gold (XAU/USD) shows marginal gains on Monday, as the US Dollar recovery stalled and Oil prices pulled back from highs. The precious metal remains capped below a descending trendline resistance, but downside attempts remain supported above the $3,965 area, thus forming a descending triangle pattern
Simmering tensions in the Middle East keep Gold rallies subdued, but recent comments from Iran’s Foreign Ministry Esmaeil Baghaei, suggesting that efforts to de-escalate the conflict are going on, have provided a glimpse of hope on Monday. Risk appetite added some pressure on the US Dollar and pulled Oil prices down from one-month highs, which is good news for Gold.
The US Dollar also remains weighed by the softer-than-expected US inflation figures released last week, which have prompted investors to dial down expectations of any Federal Reserve monetary tightening in the coming months.
Technical Analysis: Triangle formation and bullish divergence
XAU/USD trades at $4,021, with the bearish structure in play, yet with a triangle formation and some bullish divergence in the Relative Strength Index (RSI), suggesting that bears might have run out of steam. The 4-hour RSI has recovered toward a neutral level while the Moving Average Convergence Divergence (MACD) has turned positive, hinting at building but still constrained buying interest.
Bulls, however, would have to break the top of the triangle, now around $4,050, to confirm a trend shift, aiming for the $4100 area (July 14 high) and the $4,210 area (July 6 high). A break below year-to date lows at $3,941 would expose the October 2025 low, at $3,886. Further down, the 127.2% Fibonacci extension of the late-June downleg, at the $3,830 area, emerges as the next target.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
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