Gold Price Forecast: XAU/USD gives signs of life and reclaims $2,600/oz

After six consecutive days of losses, Gold prices manage to regain some balance and trim part of the recent intense pullback, reclaiming the $2,600 mark per troy ounce and above in quite a positive start to the new trading week.

The favourable backdrop in the precious metal also appears propped up by another negative day in the US Dollar (USD) as market participants keep re-assessing the recent Trump-infused strong rally, while the lack of a clear direction in US yields across different time frames also gives the yellow metal fresh legs.

However, the resurgence of the geopolitical factor, precisely from the Russia-Ukraine war, seems to be mostly behind the wake-up call in the metal, particularly after Biden’s administration “authorised” Ukraine to use US-made weapons to strike Russian territory.

Moving forward, it should be a week dominated by data releases surrounding the real economy worldwide, where the publication of preliminary PMIs is expected to take centre stage. In addition, opinions from central bank officials are also seen keeping investors entertained, especially after Fed’s Chair Jerome Powell suggested last week that the central bank is in no rush to cut its interest rates further given a resilient US economy.

On another front, non-commercial players (speculators) have reduced their net long positions in Gold to about 236.5K contracts, a level not seen since early June, according to the CFTC Positioning report for the week ending November 12. This retracement also came in tandem with the second straight drop in open interest, aligning with the recent decline.

XAU/USD short-term technical outlook

The daily chart for XAU/USD shows that it bounced from a bullish 100 Simple Moving Average (SMA) near $2,550, a region close to the November low ($2,536). However, the initial hurdle above $2,600 coincides with a Fibo retracement of the yearly rally and is expected to offer decent resistance.

In the near term, and according to the 4-hour chart, the ongoing upward correction seems poised to continue. The Relative Strength Index (RSI) rebounded but met resistance around the 55 level, while the Average Directional Index (ADX) around 32 is not supportive of a strong trend.

Initially, on the upside, emerges the 55-SMA at $2,630, which precedes the more significant 200-SMA and the provisional 100-SMA at $2,679 and $2,684, respectively. On the other hand comes $2,536.