Gold: 50-DMA at $1924 is the level to beat for the bulls

Gold (XAU/USD) rallied about 1% on Wednesday and clocked fresh one-week highs at $1932 before retracing slightly to finish the day around $1925. The yellow metal’s correction continues so far this Thursday amid souring risk tone on US stimulus uncertainty and election meddling news, FXStreet’s Dhwani Mehta briefs.

More:

• Gold: More weakness in the near-term before soaring to $2,000 next year – ABN Amro
• Gold needs to clear the $1,973 September high to resume the uptrend – Standard Chartered

Key quotes

“The tide turned in favor of the dollar bulls towards the mid-American session after Wall Street stocks tumbled on reports that Senate Republicans showed reluctance on approving a multi-trillion-dollar stimulus deal. Uncertainty over the next round of stimulus talks creeps in, as President Trump lashed out at the House Speaker Nancy Pelosi after she pushed for a $2 trillion proposal.”  

“Adding to the risk-off mood, US National Intelligence Director and FBI Director warned over Russia and Iran trying to meddle with the November 3 elections. However, any positive development on the stimulus front and or upbeat US jobless claims data could revive the appetite for risk assets, which could likely weigh on the dollar and render gold-supportive.”

“After a big falling wedge breakout validated on the daily chart on Wednesday, the bulls face a stiff resistance at the 50-daily moving average (DMA) at $1924. Therefore, the bullish momentum is likely to regain traction only on a sustained break above the mentioned powerful barrier. The next critical resistance is aligned at the October 12 high of $1933.30, beyond which the psychological $1950 level will be put at risk.”

“On the flip side, the 21-DMA at $1898 will continue to guard the downside. A break below the latter could test the 100-DMA support at $1879.”