Article by: ETO Markets

Gold prices (XAU/USD) struggled to break above the $2,400 mark and attracted some intraday sellers. The surge in risk appetite has also put some downward pressure on safe-haven precious metals. However, geopolitical risks stemming from the ongoing conflict in the Middle East have provided some support to gold prices. Still, growing expectations that the Fed will start cutting interest rates in September limited the dollar's gains and helped gold stay relatively high. In addition, traders are awaiting the outcome of Wednesday's Federal Open Market Committee (FOMC) meeting to further determine the short-term direction of gold.

From a technical point of view, gold's pullback after failing to break the $… mark shows a lack of upward pressure. At present, the volatility indicators on the daily chart are starting to gain negative traction, suggesting that gold prices may face further downside risks. However, bearish traders need to wait for a sustained break below the Bollinger band mid-track support, which is currently located near the $… area, before making new bets. A break below last week's volatile low (near $…) would reconfirm the negative outlook and drag the XAU/USD to the next relevant support near $…. The downward trajectory could extend further to test the round $… mark. On the other hand, a break above the $… mark could see resistance near $…. A sustained move higher would signal the end of previous corrective declines and set the stage for further gains. Subsequently, gold could climb to intermediate resistance levels of $…-… and challenge all-time highs of $…-….