Gold Price Forecasts: XAU/USD hits lows sub-$3,900 weighed by risk-on markets

• Gold extends losses on risk appetite, hitting three-week lows below $3,900
• A US-Japan deal and hopes of further de-escalation of the Sino-US trade frictions are boosting risk appetite.
• XAU/USD's correction might extend to the $3,800 area.

Gold trades lower for the third consecutive day on Tuesday, depreciating beyond 4% so far this week, as new trade agreements between the US and Asian countries underpin investors' appetite for risk, weighing safe-havens like Gold. The Precious metal hit fresh three-week lows at S3,886 earlier on Tuesday before returning to levels right above $3,900 at the time of writing.

US President Donald Trump has signed an agreement with the Japanese Prime Minister, Sanae Takaichi, to secure the supply of rare earths, which has contributed to supporting investors' appetite for risk. The focus, however, remains on the Trump-Xi summit later this week, with the advances in the talks between US and Chinese representatives in Malaysia this weekend and the signs of de-escalation, mainly from the US side, are boosting hopes that a trade war will be averted.

Technical Analysis: Gold is correcting lower from all-time highs

A look at the 4-hour charts reveals an immediate bearish trend, with Gold prices correcting lower after having rallied more than 30% since late August. A failure to regain a previous support level, at $4,010 on Monday, has confirmed that the negative trend remains in play.

Prices are now testing the 61.8% Fibonacci retracement of the September 18- October 17 bull run, at the $3,920 area. An A-B=C-D correction would target the confluence of the September 30, October 2 lows, with the 78.2% Fibonacci retracement of the previously mentioned cycle, in the area between $3,795 and $3,830.

Upside attempts are likely to be challenged at the October 22 low, in the area of $4,010 and the $4.150 (October 22 and 23 highs). Further up, the previous support $4,185 area might hold rallies ahead of the all-time high, near $4,380

Fibonacci