XAU/USD outlook: Limited correction under new record high seen
XAU/USD
Gold spiked to new record high at $3871 on Tuesday, in extension of Monday’s strong acceleration higher when the metal advanced 2%, in a biggest daily gain since May 6.
Mounting concerns about potential US government shutdown on Oct 1 and expectations for further Fed rate cuts sparked fresh wave of strong safe-haven demand.
The yellow metal extended its larger and steep uptrend in August after a three-month consolidation, with strong acceleration in September resulting in the massive gains (gold was up around 11% for the month.
Worsening geopolitical situation, fragile conditions in most developed economies and deepening political crisis in the number of countries, contribute to the cocktail of factors that continue to prompt investors into safety.
The fact that bulls took only six days to rise from $3700 to $3800 and rose near $3900 in just two days, points to the strength of bullish sentiment and a pace of metal’s price rise.
Bulls already eye magic $4000 barrier, which, I believe will be reached before the end of the year.
Monday’s pullback from new all-time high, could be described as limited correction of strong rally previous day and positioning for fresh push into uncharted territory, as initial and solid supports at $3800 zone contained today’s dip, keeping broader bullish bias and subsequent bounce has so far retraced the largest part of today’s correction.
Focus remains at the upside, with $3871 peak being immediate target ahead of psychological $3900.
However, caution on developments with US government, as well as potential month-end profit-taking.
Res: 3871; 3880; 3900; 3920.
Sup: 3841; 3830; 3820; 3800.
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Author
Slobodan Drvenica
Windsor Brokers
Industry veteran with over 22 years’ experience, Slobodan Drvenica joined Windsor Brokers in 1995 when he was an active trader for more than 10 years, managing the trading desk and own account departments.
