Warning signal: Gold's failure at the 200-day moving average puts $3,940 in play
Gold (XAU/USD) finds itself pulled in two directions: official-sector demand continues to underpin prices even at elevated levels, while the technical picture has deteriorated after the metal failed to hold above its 200-day Simple Moving Average (SMA), leaving key supports exposed.
A warning signal emerges for gold after it fails to hold above its 200-day moving average, potentially exposing prices to the $3,940 level. ING's commodities team, including Warren Patterson and Ewa Manthey, highlights official-sector demand as the market's structural backbone. World Gold Council data reveals central banks, driven by long-term objectives, remain net buyers, with China leading purchases of 20 tonnes and Poland and Uzbekistan each adding 8 tonnes.
However, Societe Generale strategists remain cautious, anticipating a breakdown towards the $3,960-$3,940 support zone if gold cannot defend the $4,095 level. Despite central bank buying acting as a potential support, price action remains the key driver in the near term.
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