Gold regained its traction and rose above $1,670 following a consolidation phase in the early American session. The BoC's dovish hike weighed heavily on the US Treasury bond yields with the 10-year reference falling over 2% and fueled XAU/USD's upside.

Gold below $1,691/76 has reinforced its existing large ‘double top’. Hence, with a top in place, we expect XAU/USD to come under renewed pressure. We note that the next support is seen at $1,614, then $1,560 and eventually our core objective at $1,451/40.

Only a convincing weekly close above the 55-DMA at $1,699 would ease the pressure on the yellow metal, with next resistance then seen at the even more important 200-DMA, currently at $1,813, which we would expect to cap at the very latest.

Apart from this, signs of stability in the financial markets might further contribute to capping the safe-haven XAU/USD, at least for the time being. Hence, any subsequent move up is more likely to confront resistance near the $1,780-$1,782 supply zone.

price is looking to test the 21-Daily Moving Average (DMA) at $1,668 on the road to recovery. Daily closing above the latter will confirm a bullish reversal from near 2022 lows of $1,615. The next upside barrier is seen at Monday’s high of $1,671. Further up, buying resurgence will be seen above the October 13 high at $1,683, as buyers target the $1,700 threshold.

“On the downside, the $1,650 psychological support will be challenged, at first. It’s critical for bulls to defend the previous day’s low of $1,638. A breach of the last will reopen the downside towards $1,600.

A short down before a strong hawk takes over

Oct 26 2022