Gold prices weaken further, strong dollar and risk asset preference break through the $4,050 support level

Continuous Selling in the Asian Market, Formation of a Box Range

On Monday’s Asian trading session, gold(XAU/USD) failed to break out of the range established since last week and fell below $4,050 per ounce. Although there was an initial attempt to rebound, the lack of buying momentum led to a persistent bearish trend, and while it did not drop to panic-selling levels, the overall flow remains downward.

There are three main factors pressuring gold prices. First, the US dollar has remained strong near its highest levels since late May. Second, as risk appetite recovers in global equity markets, demand for non-yielding assets like gold is decreasing. Third, mixed signals within the Federal Reserve(Fed) are sustaining dollar strength.

Divergent Fed Stances Provide Rationale for Dollar Strength

New York Fed President John Williams hinted that the current monetary policy is “somewhat restrictive,” suggesting a possible rate cut in December. As a result, the market has increased the probability of a rate cut in December to 67%, fueling expectations of easing measures.

However, Dallas Fed President Lori Logan maintains a hawkish stance, asserting that “maintaining the current rate level is appropriate.” Amid these conflicting signals, the dollar continues to serve as a stable store of value, controlling the rebound of gold prices.

Geopolitical Tensions and Reassessment of Gold’s Safe-Haven Premium

Escalating conflicts between Ukraine and Russia remain key support factors for gold prices. Recent drone attacks on Moscow’s power facilities and Russia’s expansion into eastern territories have complicated the situation, while the presentation of a peace plan with 28 provisions by Donald Trump has increased political uncertainty. These geopolitical risks are acting as catalysts, reaffirming gold’s role as a crisis response asset.

Technical Chart Analysis Using EMA Moving Averages and Trendlines

Key Defense Level: $4,030 (200EMA + Trendline Intersection)

The most critical technical level for XAU/USD is $4,030 on the 4-hour chart. This level is a strong support point where the upward trendline formed since late October intersects with the 200-period exponential moving average(200EMA). The 200EMA is a key indicator for medium-term trend direction; a breakdown below this level could signal a bearish reversal.

Downside Scenario: Drop to Psychological Resistance Level

If $4,030 breaks, testing the psychological support at $4,000 becomes inevitable. Further declines could target last week’s swing lows of $3,967–$3,968 as the first objective, followed by a downward path toward $3,931 → $3,900 → the late October low of $3,886.

Upside Scenario: Breaking Through $4,100 is Crucial

To succeed in a rebound, gold must break and hold above the horizontal resistance at $4,100. If successful, prices could rise through $4,152–$4,155 to the round figure of $4,200, although this zone has previous supply levels, so increased volatility is expected.

Currently, gold is trading within a narrow range between $4,030 and $4,100, balancing downward pressure from a strong dollar and support from geopolitical factors. The short-term direction will likely depend on whether the trendline and EMA support zones can hold.