Gold Price Forecast: XAU/USD holds above $3,620, on a soft USD, geopolitical tensions

• Gold bounces up at $3,620, favoured by Fed easing expectations and geopolitical concerns.
• The precious metal remains near record highs despite its overbought condition.
• XAU/USD shows a bearish divergence after having rallied more than10% over the last three weeks.

Gold keeps trading higher on Wednesday despite its overstretched condition and technical signals anticipating a bearish correction. The weak US Dollar, amid rising bets of Fed easing and rising geopolitical tensions in Europe and the Middle East, keeps Bullion's safe-haven appeal intact.

XAU/USD found buyers at the $3,620 area on early trading on Wednesday and returned to levels beyond $3,650, with Tuesday's high, at $3,675 on sight. Israel's attack to the Hamas leadership in Qatar and reports that Poland shot down drones, allegedly Russian in its airspace, have provided additional support to precious metals.

Technical analysis: XAU/USD is ripe for a bearish correction

The technical picture, however, shows signals suggesting an impending bearish correction. The Relative Strength Index is at overbought levels on the Daily and most intraday charts, and the 4-hour graphics reflect a clear bearish divergence, hinting that the upside cycle is exhausted after rallying beyond 10% in the last three weeks.

Bulls are likely to be challenged at Wednesday's record high of $3,675. Above here, the 261.8% Fibonacci extension of the September 3-4 pullback, at the $3,700 area, seems a plausible target for buyers.
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On the flipside, a bearish reversal below the mentioned lows, at $3,620, is likely to add pressure towards the September 3 high, $3.580, that held bears on Monday. Further down, the September 4 low, at $3,510, would cone into view.