• Oversold gold is showing signs of life on the technical charts.
  • Risk reversals have shed bearish bias.
  • The seasonality study indicates gold has largely put on a good show in August.

Gold could be in for a much-awaited corrective rally next week. At press time, the yellow metal is trading at $1,211 - largely unchanged week-on-week, but down 11.28 percent from the April high of $1,365.

Technicals are calling a corrective rally

Daily chart

Gold has taken out the descending trend line and has built a base around $1,205, adding credence to the bullish relative strength index (RSI) divergence. As a result, a corrective rally to the descending 50-day moving average (MA) could be on the cards. AS of writing, the 50-day MA is located at $1,250.

Risk reversals have shed bearish bias


The XAU/USD (gold) one-month 25 delta risk reversals have risen from last Friday's print of -0.80 to today's level of zero, indicating the options market is no longer bearish on the yellow metal. The data only adds credence to the signs of short-term bullish reversal seen in the technical charts.

Seasonality favors gold bulls

As seen in the above chart, gold has performed well in August in 13 out of the last 17 years. These numbers, when viewed against the backdrop of the bullish technical setup and the turnaround in the options market sentiment, indicate the metal is more likely to rally over the next week or two.


  • Gold is seen rising to $1,235 over the next few days. A close above that level would only bolster the above discussed bullish factors and open the doors to $1,250.
  • On the downside, a close below $1,200 (psychological level) would shift risk in favor of a drop to $1,172 (61.8 percent Fibonacci retracement of the rally from the December 2015 low of $1,046.54 to July 2016 high of $1,375.15).

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.

Analysis feed

Latest Forex Analysis

Editors’ Picks

EUR/USD consolidating as markets digest the new US-Sino trade truce

EUR/UDS is trading around 1.1030, little changed. Markets are digesting the US-Sino handshake deal that prevents new US tariffs that were planned for Tuesday. Euro-zone industrial output is due out.


GBP/USD gives up intraday gains, hovers near daily lows

The GBP/USD pair failed to sustain gains above the 1.2600 figure and nears its daily low at 1.2515, as Brexit uncertainty dents Sterling demand. UK elections’ possibility resurged in market’s talks.


USD/JPY retreats from 2-1/2 month tops, still comfortable above 108.00 handle

A partial US-China trade deal on Friday weighed on the JPY’s safe-haven status. Traders now seemed inclined to book profit despite a pickup in the USD demand.


Forex Today: Markets skeptical about US-Sino trade truce and sterling suffers a hangover as talks continue

Markets are cautious regarding the US-Sino partial trade deal. The world's largest economy agreed on a "hand-shake" agreement which is yet to be written. It includes a Chinese commitment to buy agrifoods.

Read more

Gold climbs to session tops, inching closer to $1500 mark

Gold edged higher through the early European session and is currently placed at the top end of its daily trading range, around the $1495 region.

Gold News

Forex Majors