Gold Price Analysis: XAU/USD Maintains Position Above $3,620 Amid Dollar Weakness and Global Tensions

• Gold prices rebound from $3,620 level, supported by Federal Reserve easing expectations and escalating geopolitical concerns • The precious metal trades near all-time highs despite technical indicators showing overbought conditions • Technical charts reveal bearish divergence patterns after gold’s impressive 10%+ rally over the past three weeks

Gold continues its upward trajectory on Wednesday, defying technical signals that suggest an impending correction. The persistent weakness in the US Dollar, combined with growing market expectations for Federal Reserve easing measures and heightened geopolitical tensions across Europe and the Middle East, continues to bolster gold’s appeal as a premier safe-haven asset.

The precious metal found strong buying interest at the critical $3,620 support level during early Wednesday trading sessions, subsequently climbing back above $3,650 with Tuesday’s peak of $3,675 firmly in sight. Market sentiment has been particularly influenced by Israel’s military operations against Hamas leadership in Qatar, along with reports of Poland intercepting unidentified drones—suspected to be of Russian origin—within its airspace, both factors providing substantial support for precious metals across trading boards.

Technical Analysis: XAU/USD Signals Potential Correction Phase

Despite the continued bullish momentum, multiple technical indicators are flashing warning signs of an overextended market. The Relative Strength Index (RSI) remains firmly in overbought territory on daily charts and across most intraday timeframes. More significantly, the 4-hour chart displays a clear bearish divergence pattern—a classic technical signal indicating diminishing momentum despite rising prices—suggesting the current upward cycle may be reaching exhaustion after gold’s remarkable 10%+ surge over just three weeks.

Bulls face a significant challenge at Wednesday’s record high of $3,675. A sustained break above this level could potentially target the 261.8% Fibonacci extension of the September 3-4 pullback, positioned around the psychological $3,700 threshold, which represents a logical objective for buyers in the near term.

On the downside, a reversal below the critical $3,620 support zone would likely accelerate selling pressure toward Monday’s tested level at $3,580, which corresponds to the September 3 high. Further deterioration could expose the September 4 low at $3,510, marking a key defensive position for gold bulls.

Gold Market Fundamentals

Gold’s historical role as both a store of value and medium of exchange has evolved into its modern status as a primary safe-haven asset. Beyond its decorative applications, the precious metal serves as a hedge against inflation and currency depreciation, particularly valuable during periods of economic uncertainty as it operates independently of government-issued currencies.

Central bank purchasing remains one of the most significant drivers of gold demand globally. These institutions strategically diversify their reserves by acquiring gold to strengthen perceived economic stability and currency backing. According to recent data, central banks have substantially increased their gold reserves, with emerging economies like China, India, and Turkey leading this acceleration in precious metal accumulation.

The metal’s price movements are typically inversely correlated with the US Dollar and Treasury yields. During periods of dollar depreciation, gold prices generally rise, making it an effective diversification tool during market turbulence. Similarly, gold often moves contrary to risk assets, weakening during stock market rallies while strengthening during equity market corrections.