Gold struggled to find direction in the first half of the week but came under strong bearish pressure late Wednesday with the initial market reaction to the US Federal Reserve’s policy announcements. The sharp decline witnessed in the benchmark 10-year US Treasury bond yield, however, allowed XAU/USD to stage a decisive rebound toward $1,800 on Thursday. Although the dollar ended the week decisively higher against other major currencies, gold didn't have a difficult time clinging to its gains in the second half of the week. The data from the US revealed on Monday that the ISM Manufacturing PMI edged lower to 60.8 in October from 61.1 in September. The Prices Paid component of the ISM’s survey jumped to 85.7 from 81.2, confirming that input price pressures remained elevated. Nonetheless, XAU/USD stayed in a consolidation phase with investors moving to the sidelines ahead of the Fed’s policy decisions.

BULLISH AND BEARISH CONDITIONS/ POSSIBILITIES :

Gold price is eyeing a sustained move above the $1,800 mark to unleash the additional recovery rally towards the previous week’s high of $1,810.

The 14-day Relative Strength Index (RSI) is pointing north above the 50.00 level, suggesting that the bulls will likely remain in control in the near term.

On the downside, immediate support is at the 200-Daily Moving Average (DMA) at $1,791, below which a strong cushion appears around $1,784. At that level, the 21 and 100-DMAs hang closer.

Further south, the horizontal 50-DMA at $1779 could be challenged.

All in all, the path of least resistance appears to the upside, as gold price closed Thursday above the critical 200-DMA barrier.

Gold bulls holding momentum below 1834

Nov 08 2021