- Gold continues its downward trend as positive market sentiment diminishes the interest in safe-haven assets.
- Expectations for diplomatic resolutions in the Middle East conflict are fostering a cautious appetite for risk on Friday.
- XAU/USD faces increasing bearish pressure after breaking out of the wedge pattern.
Gold (XAU/USD) is trading lower on Friday, responding to easing tensions in regional conflicts in the Middle East. The precious metal is continuing its retreat from last week’s high of nearly $3,450, marking a steady decline of 2.75% on what has become the worst week in the past six weeks.
On Thursday, US President Donald Trump reassured the markets, noting that it would take two weeks to determine whether an attack on Iran would happen, which helped alleviate fears of a broad war with unforeseen consequences.
Additionally, reports of European officials engaging in discussions with Iranian representatives have sparked hopes for a negotiated resolution, pushing risk-taking behavior that negatively impacts gold.
Technical Analysis: Price Movement Disrupts Wedge Pattern
The XAU/USD shows a notable reversal starting from $3,450. This trend disrupts a wedge formation that has been in place since mid-May, indicating a shift toward bearish momentum.
The relative strength index (RSI) on the 4-hour chart has dropped significantly below 50, hovering at a low from June 12th and putting pressure on the $3,340 mark. Should it fall below this, the next levels of support are around $3,300, consistent with bearish activity noted on June 9th and 10th.
A possible rebound from these levels could face resistance near $3,390, particularly after reaching $3,400 on June 18th.
