After closing the previous week on a firm footing, gold continued to edge higher on Monday and Tuesday but lost its bullish momentum near $1,830. With data from the US showing that consumer inflation reached its highest level since 1990, XAU/USD regained traction and touched its highest level since June at $1,868 on Wednesday. Although gold retreated from that level, it managed to close in the positive territory on Wednesday and Thursday before going into a consolidation phase on Friday. For the week, the pair rose more than 2%. Additionally, bullish momentum gathered strength with the failure of the key resistance area at $1,830 and XAU/USD advanced to a five-month top near $1,870. 

BULLISH AND BEARISH CONDITIONS/ POSSIBILITIES :

Following the six-day rally, the Relative Strength Index (RSI) indicator on the daily chart reached 70, suggesting that Friday’s decline was a technical correction rather than a reversal of direction. However, Gold seems to have lost its bullish momentum near a key Fibonacci retracement level and buyers might want to stay on the sidelines before committing to additional gains.

On the downside, $1,830 (previous resistance, Fibonacci 38.2% retracement of April-June uptrend) aligns as key support. In case bulls continue to defend this area and don’t allow it to turn into resistance, XAU/USD is likely to regain its traction. Below that level, $1,800 (psychological level) could be seen as the next support before $1,790 (100-day SMA, 200-day SMA).

Above $1,865 (Fibonacci 23.6% retracement), resistances are located at $1,880 (static level) and $1,900 (psychological level).

Gold will likely extend its gains towards $1890

Nov 14 2021