Gold Faces Crosswinds: Will Support Zones Hold as Correction Clouds Loom?

As the week begins, XAU/USD continues to trade near multi-week highs supported by safe-haven inflows. Geopolitical stress, especially in the Middle East, sustains a bullish bias as investors turn away from riskier assets. The weakened U.S. Dollar further reinforces upward pressure on gold, helping maintain its strength above the $3,340 level.

Despite the optimistic momentum, some institutional outlooks have turned cautious. Quant Mutual Fund's recent analysis warns of a 12–15% pullback looming. Their projection suggests that current gold valuations may be overextended and due for a correction in the coming weeks. This adds a layer of uncertainty to an otherwise strong uptrend.

From a technical standpoint, gold maintains its position above the 50-day EMA, a positive indicator for bulls. However, bearish divergence on the RSI shows slowing momentum, which often precedes a short-term pullback. Immediate resistance lies at $3,366 and $3,392, while key support stands at $3,340 and $3,300.

Forecasts show continued bullish sentiment, with CoinCodex projecting a 3.8% weekly gain toward the $3,562 mark. Other models eye even higher levels, up to $3,635, should geopolitical tensions escalate further. Still, these projections depend heavily on global risk sentiment and U.S. economic developments.

Traders should monitor price action near the $3,366 resistance closely. A clear break above this level could lead to accelerated gains, especially if accompanied by volume. On the flip side, sustained selling pressure below $3,340 might confirm a retracement toward $3,300 or even $3,260 support.

U.S. macroeconomic data, particularly inflation and employment numbers, will also play a major role this week. Any hawkish shift from the Federal Reserve could trigger Dollar strength and cap gold's rise. Conversely, weak economic prints may revive dovish sentiment and drive further gold buying.

In summary, gold stands at a technically strong but fundamentally conflicted position. Bulls remain in control, but warning signs from major institutions and technical momentum indicators suggest caution is warranted. Flexibility and disciplined risk management will be essential in navigating this high-stakes, two-sided market.