The XAU/USD pair (gold prices in terms of the US dollar) halted its corrective slide and rebounded on Tuesday, although remained in familiar ranges between 1165-1185 levels. The prices found good support near the 10-DMA located at 1166.18 and bounced higher, piercing through the 200-DMA at 1175.91 and finished the day well above the last. The yellow metal shot higher on Tuesday, completely ignoring impressive US housing starts-led USD strength, on renewed talks of further easing by global central banks including the BOJ and the ECB. While Fed rate hike bets are almost priced-out for this year. The US housing starts rose 1.21 million in Sept versus an expected rise of 1.14 million, hitting fresh eight-year highs.
As for today’s trade so far, XAU/USD keeps its range-trade intact around the 200-DMA now located at 1175.63 while finding good support at the Fib 23.60% retracement of Oct 2-15 rally which lies at 1171.44. The yellow metal is expected to consolidate in the day amid lack of fresh fundamental news as today’s macro calendar remains dry. While tomorrow’s ECB meeting might spur fresh moves in gold, as markets are expecting the central bank to deliver hints on the QE extension/expansion this year. Overall, a generalized intraday neutral to upside bias persists for the bullion so long as it holds above 1167-1165 ley levels.
Technicals – Directionless with doji on daily charts
On daily charts, the prices are currently clinging to the 200-DMA placed at 1175.63, oscillating in a $ 6 narrow range. The prices are supported above the Fib 23.60% retracement and looks to head higher towards 1180.90 (Oct 20 High), beyond which 1185-1190 levels -multi-month highs would come into the picture. However, the daily RSI has turned lower and suggests that the pair holds limited upward strength. While the prices have formed a small doji which points to lack of clear direction and hence the pair awaits fresh incentives for further momentum. To the downside, a break below the Fib 23.60% support, the immediate support lies at 10-DMA now placed at 1169.24, below which 1167-1163 (recent low levels) could be tested.
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