Gold Price Forecast: XAU/USD recovers $1.970, bulls not willing to give up

Valeria Bednarik FXStreet

XAU/USD Current price: $1,975.54

Financial markets are in a better mood on Tuesday despite mixed growth figures.
Government bond yields stabilized far below their Monday peaks.
XAU/USD changed course after an early dip to $1,953, bulls maintain the pressure.

Resurgent demand for the US Dollar weighed on Gold price, sending XAU/USD to an intraday low of $1,953.53 a troy ounce during London trading hours. Financial markets kick-started Tuesday with a bit more optimism as Israel continues to delay a ground incursion into the Gaza Strip, hoping Hamas will continue to free hostages. The chances of a diplomatic solution are null despite global authorities urging for a peaceful solution.

Global bonds recovered ground, and yields retreated from Monday’s peaks, putting modest pressure on the USD throughout the first half of the day. The Greenback, however, recovered ahead of the US opening, as European data signaled a steeper economic contraction at the beginning of Q4, spurring global growth concerns.

The USD retained its positive momentum following the release of upbeat United States (US) data, as S&P Global reported business activity expanded in October by more than anticipated. The preliminary estimate of the Manufacturing PMI printed at 50, while the services index came in at 50.9. Finally, the Composite PMI was reported at 51, the highest in three months.

Mid-American session, Treasury yields are stable, while US indexes remain in the green, allowing XAU/USD to trim intraday losses.

XAU/USD short-term technical outlook

XAU/USD trades above $1,970 a troy ounce, and the daily chart shows it posted a lower low and lower high, which somehow anticipates upward exhaustion. At the same time, technical indicators remain flat within overbought readings. Finally, the pair keeps developing far above all its moving averages, with the 20 Simple Moving Average (SMA) gaining upward traction far below the longer ones.

The risk skews to the upside in the near term, and according to the 4-hour chart. Technical indicators turned higher, although the Momentum remains just below its 100 line. At the same time, the pair is battling to recover above a bullish 20 SMA while the longer moving averages keep grinding higher far below the current level.

Support levels: 1,964.30 1,953.30 1,936.60

Resistance levels: 1,982.80 1,997.30 2,008.10

View Live Chart for XAU/USD

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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