Oversold backdrop limits further downside for Gold drop

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Gold declines 1.6% to $4,124 today

Highlights

Physically-backed gold ETFs reversed five weeks of outflows by recording net inflows, signaling a surge in institutional demand.
Global central banks increased their gold reserves, supporting steady official sector demand despite underlying price weakness.
Gold trades below key technical averages, with bearish momentum dominating; expected to range between $4,066 and $4,183 over the next 2-3 days.

Institutional inflows and central bank buying as selling pressure persists

Physically-backed gold exchange-traded funds saw renewed inflows following five consecutive weeks of outflows, highlighting a positive shift in institutional demand for gold products, according to Thehindubusinessline. This move increases physical demand for gold and may provide a degree of support to underlying prices through enhanced liquidity. Central banks also added to their gold reserves, supplementing consistent demand from the official sector, as noted by Thesouthafrican, though price action has remained under broader selling pressure.

Bearish momentum intensifies as technical levels cap recovery

On the hourly chart, XAU sits below the MA-20 at $4,154 and the MA-50 at $4,167, while daily price action remains well under the MA-200 at $4,645. The Ichimoku Kijun at $4,153 now acts as immediate resistance. Momentum indicators show negative readings, with both MACD and ADX in Sell mode. RSI is at 34.53 and CCI continues weak, both signaling bearish momentum, while Stoch RSI is Neutral, and BBP reflects dominant selling and oversold conditions. AO remains Neutral, pointing to possible consolidation risk as oscillators show mild bullish divergence.

Further losses likely as sideways range constrains upside

Over the next two to three sessions, Gold is expected to fluctuate between $4,066 and $4,183, with typical volatility centered in this range. The prevailing scenario favors sideways or downward movement, with a 74% probability attached to further declines and only a 26% chance for an upswing. A decisive push above the $4,153 resistance could trigger a bullish move, while a drop below the $4,066 support would likely confirm renewed weakness.

Anton Kharitonov, expert at Traders Union, notes that gold continues to show downside momentum with price action sitting firmly below all key moving averages. He believes that while renewed ETF inflows and increased central bank buying signal some return of interest, technicals point to clear selling pressure. Kharitonov sees any bounce capped unless $4,153 gives way and expects further declines if $4,066 fails. "Base case remains defensive — unless we see a close above immediate resistance, I expect sideways-to-lower action to persist."

Previously, analysts noted that New Zealand’s accelerating gold mining ambitions and easing of regulatory hurdles were bolstering sector recovery despite environmental concerns. Against this backdrop, renewed institutional flows and central bank demand now present a counterbalance to prevailing downside pressures, making a break above $4,153 an important trigger for any bullish reversal in the near term.

Source of Data: XAU Price Analysis by TU

The analysis is based on a proprietary model combining technical, on-chain, and expert data. Not investment advice. See methodology

The information is based on forecasts and does not constitute investment advice or a guarantee of future results. Market conditions may change. See our Disclaimer and Editorial Integrity for details.