Gold prices (XAU/USD) are showing a temporary recovery on Friday, trading slightly higher around $2,330. This uptick comes after a recent sell-off and is driven by a combination of factors:

Increased Safe-Haven Demand:

• Geopolitical Tensions: Renewed military drills by China near Taiwan and recognition of Palestinian statehood by some European nations have heightened geopolitical concerns, pushing investors towards safe havens like gold.
• Asian Market Slump: Asian stock markets have opened lower on Friday, reflecting investor anxiety.

Counteracting Factors:

• Strong US Economic Data: Positive US PMI data, particularly in the services sector, has reduced expectations of early interest rate cuts by the Federal Reserve. This weakens the appeal of gold, which offers no yield.
• Decreased Indian Imports: High gold prices may be discouraging Indian consumers from buying, potentially limiting demand.

Technical Analysis:

• Trendline Break: Gold has decisively broken below a key uptrend line that held since February, suggesting a potential shift towards a bearish short-term outlook.
• Downside Targets: Technical analysis indicates potential downside targets at $2,303 or even $2,272, if the downtrend continues.
• RSI and Pullback Potential: The Relative Strength Index (RSI) suggests a possible pullback in the near term, but the overall trend remains unclear.
• Long-Term Bullishness: Despite the short-term uncertainty, the medium and long-term technical outlook for gold is still considered bullish.

While geopolitical tensions are providing a temporary boost to gold prices, the broader market picture is mixed. The strong US data and technical indicators suggest potential downside risks. Investors should closely monitor developments in the global economy and geopolitical landscape to assess the future direction of gold prices. A decisive break above the former uptrend line at $2,360 would signal a potential reversal of the short-term downtrend.