Gold reversed an intraday dip to the $1,787-86 region and has now moved into the positive territory for the third successive day. The XAU/USD jumped to near one-month tops during the first half of the European session, with bulls now looking to build on the momentum beyond the very important 200-day SMA. The US dollar extended the previous day's retracement slide from 13-month tops, which, in turn, was seen as a key factor that acted as a tailwind for dollar-denominated commodities, including gold.

Apart from this, a further decline in the longer-dated US Treasury bond yields extended some additional support to the non-yielding yellow metal. This, to a larger extent, helped offset the risk-on impulse in the markets, which tends to undermine demand for the traditional safe-haven gold. It, however, remains to be seen if the XAU/USD can capitalize on the move or meets with fresh supply at higher levels amid firming expectations for an early policy tightening by the Fed. Nevertheless, a sustained strength beyond the $1,800 mark will be seen as a fresh trigger for bullish traders and set the stage for additional gains.

BULLISH AND BEARISH CONDITIONS/ POSSIBILITIES:

Bulls might now wait for a sustained move beyond the $1,796-99 confluence region, comprising of 100-day and 200-day SMAs before placing fresh bets. Some follow-through buying beyond the $1,806 area will reaffirm the positive outlook and lift the XAU/USD back towards the $1,818-20 intermediate hurdle en-route the $1,832-34 heavy supply zone.

On the flip side, any further decline is likely to find decent support near the $1,775 horizontal zone. Sustained weakness below might prompt some technical selling and turn gold vulnerable to accelerate the fall towards the $1,763-62 support zone. The next relevant support is pegged near the $1,750 region, which if broken decisively will shift the near-term bias back in favour of bearish traders.

XAUUSD

Oct 14 2021