After ending the previous week on a firm footing, the XAU/USD pair continued to edge higher on Monday and reached a 10-day top of $1,770. Nevertheless, gold struggled to extend its rebound amid dollar resilience and formed a horizontal trading channel with a lower limit of $1,750. Although the pair broke above that channel on Friday and touched a 15-day high of $1,781 with the initial reaction to the disappointing September jobs report from the US, it retreated below $1,770 ahead of the weekend. There won’t be any high-impact data releases at the start of the week. On Tuesday, the August jobs report from the UK and the ZEW Survey from Germany will be featured in the European economic docket, which are unlikely to have a significant impact on XAU/USD’s movements.

BULLISH AND BEARISH CONDITIONS/ POSSIBILITIES :

The technical outlook remains bearish with gold failing to break above the 20-day SMA for the 18th straight trading day. Additionally, the Relative Strength Index (RSI) indicator on the daily chart stays slightly below 50, confirming the view that sellers are looking to remain in control of XAU/USD's action.

On the downside, the initial support is located at $1,750 (lower limit of the weekly channel) ahead of $1,730 (static level) and $1,720 (late September low).

The first hurdle aligns at $1,763 (20-day SMA) ahead of $1,780 (October 8 high, 50- day SMA). Only a daily close above the latter could open the door for a prolonged rebound toward $1,800, where the 100-day SMA, 200-day SMA and the Fibonacci 50% retracement of the April-June rally meet.

XAUUSD near high supply demand zone

Oct 10 2021