#Gold Technical Analysis# #Middle East Situation# 24K99 News On Wednesday (September 25), spot gold once broke through $2,670 per ounce during the trading session, hitting a historical high, but later the price experienced a significant decline, closing near $2,656 per ounce.

Analysts point out that gold is technically overbought, putting pressure on the price for a possible pullback. The strength of the US dollar and US Treasury yields also weigh on gold. In addition, there are reports that the United States is developing a temporary ceasefire plan between Israel and Hezbollah, which has dampened safe-haven sentiment and thus affected gold prices.

Spot gold reached a high of $2,670.53 per ounce during Wednesday's trading session, but the price staged a 'high-altitude diving,' ultimately closing at $2,656.55 per ounce.

FXStreet Senior Analyst Dhwani Mehta pointed out on Wednesday that on the daily chart, the price of gold has entered an extremely overbought condition, facing the risk of a correction.

FXStreet Analyst Christian Borjon Valencia stated that due to the rise in US Treasury yields and the strength of the US dollar, the gold price retreated after hitting the historical high of $2,670 per ounce, but still held above $2,650 per ounce. The momentum of gold is still bullish.

The yield on the 10-year US Treasury notes rose by 4.5 basis points to 3.775%. Meanwhile, the US Dollar Index (DXY), which tracks the value of the dollar against six other major currencies, rebounded from a 14-month low, rising by 0.54% to 100.88.

Expectations of another significant interest rate cut by the Federal Reserve provided support for gold. Traders believe there is a 60% chance of a 50-basis-point rate cut by the Fed in November.

Major news emerges on the ceasefire in the Middle East.

According to the latest report from the U.S. news website Axios, the United States is developing a temporary ceasefire plan between Israel and Hezbollah, and the related statement is about to be released.

(Screenshot Source: Axios)

Axios reported that, according to two U.S. officials, an Israeli official, and two informed individuals, the Biden administration is developing a new diplomatic initiative aimed at 'pausing' the fighting in Lebanon and resuming negotiations on the Gaza hostages and ceasefire agreement.

The White House may announce this initiative as early as Wednesday local time, attempting to prevent the escalation of conflict between Israel and Hezbollah.

The White House stated on Wednesday that U.S. President Joe Biden met with French President Emmanuel Macron during the UN General Assembly in New York, 'discussing efforts to ensure a ceasefire between Israel and Hezbollah in Lebanon and to prevent a broader war.'

U.S. and Israeli officials said that after a phone call between White House National Security Advisor Jake Sullivan and Israeli Minister of Strategic Affairs Ron Dermer on Monday, both sides began discussing this new initiative.

A U.S. official and a European diplomat revealed that over the past two days, the United States has been discussing this idea with France, Israel, Lebanon, and several other Arab countries.

A U.S. official confirmed: 'We are in discussions with several countries on diplomatic solutions.'

An Israeli official said: 'Netanyahu has given the green light for this initiative.'

A source familiar with the plan told Axios that its purpose is to achieve a pause to allow space for broader diplomatic negotiations, to prevent wider wars, to allow displaced civilians to return to their homes on both sides of the border, and to provide new impetus for a Gaza ceasefire and a hostage agreement.

In addition, the French Foreign Minister also stated that they are working with the USA to push for a 21-day Israeli-Hamas temporary ceasefire for negotiation. The temporary ceasefire plan will be announced soon.

How to trade gold?

FXStreet analyst Christian Borjon Valencia pointed out that the price of gold is likely to continue its upward trend. However, due to a lack of catalysts, the price turned sideways on Wednesday. Once a catalyst is obtained, this could drive the price of gold to break through the current record high and head towards $2700 per ounce.

Valencia stated that from a momentum perspective, the Relative Strength Index (RSI) indicates that gold is in an overbought state, which could lead to a price decline followed by a rebound.

Valencia said that if gold continues its rebound, breaking through this year's peak of $2670 per ounce, it is expected to challenge $2675 per ounce, followed by $2700 per ounce.

With gold continuing to rise, the next target for the price is $2750 per ounce, followed by $2800 per ounce.

(Spot gold daily chart Source: FXStreet)

On the other hand, Valencia further added that if the gold price falls below $2650 per ounce, it is expected to test the high point of September 18th at $2600 per ounce. The next key resistance to be tested will be the low of September 18th at $2546 per ounce, followed by the 50-day Simple Moving Average (SMA) at $2488 per ounce.