Gold is flatlining in a tight range above $3,850 early Friday, following its two-way business on Wednesday, on track to register the seventh consecutive weekly rise.

Gold pauses before the next push higher

The Artificial Intelligence (AI) frenzy-driven record highs on global stocks and a bout of profit-taking seemed to restrict the yellow metal’s upside attempts in the US last session.

Despite the pullback from record highs of $3,897, Gold manages to attract bargain-hunting demand as increased dovish expectations surrounding the US Federal Reserve (Fed) continue to bode well for the non-yielding bright metal.

Additionally, the haven demand for Gold remains intact amid a data blackout, courtesy of the extension of the US government shutdown, and the ongoing geopolitical tensions surrounding Russia and the North Atlantic Treaty Organization (NATO) nations.

Germany’s federal Police spokesperson told BILD newspaper that Munich airport has been closed following drones spotted over the airport.

Recent drone sightings across the European Union prompted a leaders’ summit in Copenhagen this week.

20 Russian drones crossed into Poland and Russian MiG-31 jets entered Estonian airspace in separate recent incidents.

In light of this, the Group of Seven (G7) nations have vowed to tighten sanctions enforcement against Russia, pledging to phase out remaining imports and warning of penalties for countries and firms helping to finance Moscow’s war effort.

Looking ahead, Gold could see fresh retracement moves if traders continue to ignore the US shutdown concerns, further fuelling the risk rally. Markets believe that the shutdown is unlikely to last longer than a week and will likely have a negligible economic impact.

Meanwhile, the ISM Services PMI data and Fedspeak could offer fresh hints on the Fed’s path forward on easing, providing Gold traders some incentives heading into the weekend.

Gold price technical analysis: Four-hourly chart

As observed on the four-hour chart, the 14-day Relative Strength Index (RSI) holds above the midline, despite the latest move lower.

Therefore, the leading indicator continues to indicate that any dip in Gold could be quickly bought in.

Buyers must find acceptance above the $3,900 level on a daily/ weekly closing basis to resume the bullish momentum.

The next topside hurdle is located at the $3,950 barrier on the way to the $4,000 mark.  

Conversely, if the correction extends, Gold could test the initial support at $3,803, the 50-Simple Moving Average (SMA), below a drop toward the 100-SMA at $3,736 cannot be ruled out.  

Deeper declines could target the $3,700 round figure.

West Texas Intermediate (WTI) Oil price falls on Tuesday, early in the European session. WTI trades at $62.98 per barrel, down from Monday’s close at $63.01.
Brent Oil Exchange Rate (Brent crude) is also shedding ground, trading at $66.70 after its previous daily close at $66.75.

XAU/USD Current price: $3,845.50

• Risk aversion kicked in during at the American opening, after the US misses data releases.
• Hawkish comments from Federal Reserve Lorie Logan temporarily supported the USD.
• XAU/USD could extend its bearish downward correction, but the long-term bullish trend remains intact.

Gold price stood as high as $3,896.60 a troy ounce on Thursday, clinching yet another record high. The bright metal, however, retreated sharply after Wall Street’s opening and flirted with the $3,820 level.

The US Dollar (USD) traded uneventfully throughout the first half of the day, with most major pairs, including XAU/USD, stuck to limited ranges. Things take a turn for the worse after American traders reach their desks. The United States (US) Government shutdown-related concerns finally seem to have kicked in: US indexes turned sharply lower while the USD recovered its safe-haven condition early in the American session. After the initial hours of trading, the market settled, and the XAU/USD pair managed to trim some losses, currently hovering around $3,845.

Hawkish comments from the US Federal Reserve (Fed) Bank of Dallas President Lorie Logan add to the Greenback’s momentum. Logan urged caution on interest rate cuts, citing inflation is running above target and trending higher. Furthermore, Logan noted that the labor market is “only gradually slowing,” and that it remains “fairly balanced,” despite recent discouraging data.

Other than that, the US suspended the release of Initial Jobless Claims and Factory Orders. The Nonfarm Payroll (NFP) report, scheduled for Friday, will not be published, although ISM will release the September Services Purchasing Managers’ Index (PMI). The services business index is expected to print at 51.7, easing from the 52 posted in August.

XAU/USD short-term technical outlook

From a technical point of view, the daily chart shows that the XAU/USD pair slide is a mere correction. The bright metal keeps trading far above all its moving averages, with a bullish 20 Simple Moving Average (SMA) currently at around $3,712. Technical indicators have turned lower but remain above their midlines. In fact, the Relative Strength Index (RSI) edged marginally, yet at 76, still within overbought levels.

The near-term picture shows the correction may continue. In the 4-hour chart, the XAU/USD pair is currently below a flat 20 SMA, which stands in the $3,850 price zone. The 100 and 200 SMAs keep heading north, far below the current level, limiting the bearish potential of the pair. Finally, technical indicators have lost their downward strength and settled above their midlines, also hinting at the absence of relevant selling interest.

Support levels: 3,837.60 3,819.20 3,807.05

Resistance levels: 3,861.60 3,878.45 3,896.00