Gold prices (XAU/USD) declined for the sixth consecutive day on Wednesday, trading just above a three-week low set earlier, but remaining above the $2,600 level. The U.S. Dollar strengthened to its highest level since mid-August, driven by reduced expectations of aggressive monetary easing by the Federal Reserve. This surge in the dollar has weakened demand for gold, a non-yielding asset.
Additionally, reports of a potential ceasefire between Hezbollah and Israel have reduced gold’s appeal as a safe-haven investment, contributing to its decline. The drop was further exacerbated by technical selling following a break below the $2,630 support level. Traders are cautious, however, and are avoiding heavy bearish positions ahead of the Federal Open Market Committee (FOMC) meeting minutes release.
Technically, the breakdown of the $2,630 support could signal further bearish momentum, but indicators on the daily chart are not yet showing a clear negative trend. Analysts suggest waiting for sustained selling below $2,600 before confirming further declines. If gold breaks this level, it could continue to slide towards the next support near $2,560, potentially reaching the $2,530-$2,500 zone.
On the upside, the previous support level of $2,630-$2,635 is now a resistance point. Any upward movement may face selling pressure near $2,657-$2,658. If gold manages to surpass this barrier, it could rise toward $2,670-$2,672, with a potential challenge to the all-time high of $2,685-$2,686 reached in September. A break above $2,700 could indicate the continuation of a long-term uptrend.
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