Gold’s correction from above $1,240/oz continued on Wednesday amid a stronger US dollar and higher Treasury yields. Price fell below key support levels, weakening further the technical outlook.
The yellow metal is about to post the third slide in-a-row, losing again $10. The price opened above $1,220 and bottomed during the American session at $1,211. Then bounced to the upside but the recovery was limited by $1,217. Near the end of the session, XAU/USD was hovering around $1,214.
Bad days, positive month
From last week highs, gold lost $30 but still is positive for the month. At the beginning of October, it was trading at $1,191 and then started to rise. The rally lost momentum and it was followed by the current retreat. It is the first monthly gain in seven months for gold. Still, the monthly chart points to the downside but a base appears to be forming around $1,190.
XUA/USD Technical Outlook
Gold lost a key dynamic level, now resistance that is the 20 and 100-day moving average around $1,218.20 noted Valeria Bednarik, Chief Analysts at FXStreet. According to her technical indicators in the daily chart have eased sharply from nearly overbought readings, with the Momentum accelerating its decline well into positive ground, but the RSI already below its 50 level, further opening doors for a downward extension.
“In the 4 hours chart, the price is also below the 20 and 100 SMA, with the shortest heading sharply lower over $10.00 above the current level, as technical indicators attempt to bounce from oversold readings, falling short of suggesting an upcoming recovery”, says Bednarik.
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