Gold is finding a home above the $1700 level and that could continue if investors continue to look beyond hawkish central bank speak. Gold’s fate could be determined after this next inflation report.  If consumer prices come in hotter-than-expected, gold might see selling pressure target the $1680 region.  A sharp deceleration with pricing pressures might only provide a modest boost higher for gold as policy makers.

Gold turned to the downside again after approaching the $1730 area and pulled back sharply toward $1710, erasing daily gains on Friday. Stabilization of the US Dollar and a rebound in yields weighed on the yellow metal.

XAUUSD failed to break the critical resistance around $1730 and weakened. A break above would strengthen the outlook for gold, targeting first $1745 and then exposing a downtrend line at $1760. On the flip side, a daily close below $1695 would expose the long term support area at $1675 (2021 and 2022 lows).

Gold price justifies the bullish RSI divergence as the bulls approach a convergence of the 100-SMA, 61.8% Fibonacci retracement level of July-August upside and a one-week-old rising trend line.

Given the bullish MACD signals, as well as the firmer RSI backing the higher low on prices, the XAU/USD is likely to overcome the $1,730 hurdle, which in turn could propel the commodity towards the August 25 swing high near $1,765.

However, the 50% Fibonacci retracement level near $1,745 may offer an intermediate halt during the run-up.

Alternatively, pullback moves may re-test the 78.6% Fibonacci retracement support, around $1,707, before directing gold bears towards the $1,700 threshold.

Even so, the sellers remain cautious as an upward sloping trend line from late July and the yearly low, respectively near $1,690 and $1,680, could test the metal’s further downside.

Another leg up expected on Gold for completion of correction

Sep 11 2022