Article by: ETO Markets

Fears of an Israeli counterattack were stoked by Iran's major strike on Israel, which was reported in the weekend news. The latter was urged by Western partners to refrain from further hostilities, but it's not obvious what Israeli Prime Minister Benjamin Netanyahu could do in response. Netanyahu and his cabinet are debating whether or not to retaliate against Iran. The most significant impact of tensions on oil prices was a boost to demand for the US dollar.

The 4-hour chart indicates that there is a greater chance of a downward extension in the near future. At about $… , a flat 20-SMA caps rises as the longer moving averages start to lose some of their upward impetus. The Relative Strength Index begins to decline at 59. A break through of the significant support level of $… for XAU/USD would strengthen the bearish case.