Gold in the Balance: Will Bulls Stay in Control or Lose Steam This Week?

XAU/USD heads into the new week bolstered by ongoing global instability and a broadly weaker U.S. Dollar. Safe-haven flows remain robust as tensions between Israel and Iran show no signs of easing. The geopolitical uncertainty has prompted investors to seek refuge in gold, pushing prices higher and adding fuel to an already strong uptrend. This risk-averse sentiment is expected to play a major role in price direction throughout the week.

However, not all indicators support a continued rise. Market experts, including the Quant Mutual Fund, have sounded warnings about potential corrections. They predict a significant 12–15% downturn in gold prices over the next two months. This projection introduces a bearish shadow over an otherwise bullish environment. It forces traders to weigh risk and reward more carefully before entering aggressive long positions.

From a technical standpoint, gold remains above its 50-day EMA, reinforcing the medium-term uptrend narrative. The Relative Strength Index (RSI) has eased slightly, suggesting the rally may be overextended. Key resistance levels include $3,366 and $3,392, while $3,340 and $3,300 serve as critical support. If gold breaches above resistance, momentum could carry it toward $3,464 or beyond.

Short-term forecasts are largely bullish but vary in intensity. CoinCodex anticipates a 3.8% increase, projecting prices near $3,562 by midweek. Some projections go even higher, hinting at a push toward $3,635 if risk sentiment escalates. However, any improvement in global tensions or a rebound in the U.S. Dollar could quickly reverse gains. This creates a market full of opportunity but riddled with uncertainty.

Traders should be prepared for both breakout and pullback scenarios in the current environment. A clean break above $3,366 could trigger a wave of buying interest, especially if supported by volume. On the other hand, failure to hold above $3,340 might invite sellers back into the market. Scalpers and swing traders alike must stay agile and monitor key levels closely.

Volatility will likely be a constant this week, driven by news out of the Middle East and U.S. economic updates. Any signs of diplomatic progress could reduce gold’s appeal, while further escalations may provide bullish tailwinds. At the same time, upcoming Federal Reserve commentary and inflation data could strengthen or weaken the dollar, affecting gold indirectly but significantly.

In conclusion, XAU/USD remains bullish but vulnerable. While strong fundamentals and fear-driven buying keep gold afloat, technical signals and institutional caution remind traders that corrections are still possible. The safest approach may be one of flexibility—ready to follow the trend but quick to respond if sentiment suddenly shifts.