Gold trades higher after emerging market central banks boost gold reserves

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Gold jumps 1.54% today to $4,568.92

Highlights

A drone strike near a UAE nuclear site has sharply raised Middle East geopolitical risk, boosting Gold's safe-haven demand amid volatility.
Emerging-market central banks accelerated gold reserve buying to diversify from US dollar risk, strengthening structural demand for the metal.
Gold trades below key moving averages and technicals are bearish, with price expected to remain range-bound between $4,470 and $4,620 in the near term.

Safe-haven demand rises as Middle East risks and reserve shifts emerge

A drone strike targeting a nuclear facility in the United Arab Emirates has swiftly escalated geopolitical risk in the Middle East, prompting market participants to reassess Gold's safe-haven appeal in the face of surging volatility. In parallel, central banks in emerging markets have accelerated their gold accumulation strategies, seeking to diversify reserves and reduce exposure to potential US dollar sanctions and monetary instability, which underpins the metal’s longer-term demand base. Additional tension is reflected in the warning issued by the US to Iran and multiple drone interceptions in Saudi Arabia, further amplifying uncertainty and global demand for defensive assets like Gold.

Oversold technicals persist as downside momentum challenges resistance

Technically, XAU is trading below the 20-day ($4,640.92), 50-day ($4,663.22), and just under the 200-day ($4,594.02) simple moving averages, with the Ichimoku Kijun level at $4,693.86 acting as immediate resistance. The D1 MACD remains negative and signals continued selling, while the ADX points to a weak trend. Oscillator readings show pronounced oversold conditions — RSI at 38.3, Stoch RSI at 12.7 (oversold), and CCI at -114.94 (oversold) — indicating that the price is stretched to the downside. The BBP at -85.40 highlights ongoing seller dominance within intraday momentum, and the Awesome Oscillator remains in line with prevailing downside direction. The presence of an upside gap and the current price nearing today’s high reflect persistent intraday volatility despite stretched technicals.

Range trading likely as oversold signals contend with bearish trend

In the near term, gold is likely to move within a typical volatility band between $4,470 and $4,620, as short-term oversold conditions balance out continued downside momentum. The baseline scenario is for range-bound price action, with only a low probability (less than 20%) of a breakout higher, given that most weekly indicators remain neutral to bearish aside from a single bullish signal on the MACD. A move above $4,693.86 could trigger a squeeze toward $4,700, but this would require clear evidence of renewed buyer interest. Should gold drop below $4,470, sellers could gain traction for an extended move toward lower support levels.

Anton Kharitonov, expert at Traders Union, notes that geopolitical tensions and central bank accumulation are lending some support to Gold, but the overall technical picture remains bearish. He sees oversold conditions suggesting short-term stabilization, yet warns that momentum is still weak below key resistance at $4,693.86. Kharitonov believes the baseline scenario is for range-bound price action with a defensive bias. "Until XAU recovers above the major moving averages and clears $4,693.86, I remain cautious and see rallies as opportunities to reduce risk."

Earlier, analysts noted that persistent technical weakness and evolving supply dynamics were keeping gold under sustained bearish pressure. The recent escalation of geopolitical risk in the Middle East, combined with accelerated central bank gold purchases, adds a significant new driver for potential volatility, making the risk of an upside break above $4,693.86 a critical level to watch for a shift in market momentum.

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

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