Gold Price Analysis: XAU/USD extends the rangebound price moves around $1730 area

A combination of diverging forces failed to provide any meaningful impetus to gold.
The range-bound price action constitutes the formation of a bearish rectangle pattern.
Neutral oscillators warrant caution before positioning for any firm near-term direction.

Haresh Menghani FXStreet

Gold lacked any intraday directional bias and seesawed between tepid gains/minor losses through the first half of the European session. The commodity was last seen trading around the $1730 region, nearly unchanged for the day.

Concerns that the third wave of COVID-19 infections and pandemic-related restrictions could delay the global economic recovery extended some support to the safe-haven XAU/USD. However, a generally positive tone around the equity markets, stronger US dollar and a modest uptick in the US Treasury bond yields capped the upside for the commodity.

Looking at the technical picture, the XAU/USD has been oscillating in a narrow trading band over the past two weeks or so – barring the post-FOMC move up. The range-bound price action constitutes the formation of a rectangle pattern on hourly charts. This might still be categorized as a bearish continuation pattern, marking a brief pause in the trend.

The negative outlook is reinforced by the fact that the XAU/USD has repeatedly struggled to find acceptance above the $1742-44 supply zone. That said, neutral technical indicators haven't been supportive of any firm near-term direction. This makes it prudent to wait for a sustained move in either direction before placing any aggressive bets.

Meanwhile, the lower boundary of the trading range, around the $1720 region might continue to act as immediate support. A convincing break below will reaffirm a bearish break and drag the commodity to the $1700 mark. The downfall could further get extended back towards multi-month lows, around the $1677-76 region touched earlier this month.

On the flip side, the $1742-44 region remains a strong hurdle. A sustained breakthrough, leading to a subsequent strength beyond the trading range resistance, around the $1748 level, will be seen as a key trigger for bullish traders. The XAU/USD might then accelerate the move towards challenging the $1760-65 strong horizontal support breakpoint.

The latter coincides with 200-period SMA on the 4-hourly chart, which if cleared decisively will set the stage for additional gains. The precious metal might then surpass an intermediate barrier near the $1773-75 region and aim to reclaim the $1800 mark.

XAU/USD 4-hourly chart

Technical levels to watch

XAU/USD

Overview
Today last price	1732.23
Today Daily Change	-2.73
Today Daily Change %	-0.16
Today daily open	1734.96

Trends
Daily SMA20	1726.26
Daily SMA50	1787.01
Daily SMA100	1826.41
Daily SMA200	1860.65

Levels
Previous Daily High	1738.48
Previous Daily Low	1723.86
Previous Weekly High	1755.59
Previous Weekly Low	1719.3
Previous Monthly High	1871.9
Previous Monthly Low	1717.24
Daily Fibonacci 38.2%	1732.9
Daily Fibonacci 61.8%	1729.44
Daily Pivot Point S1	1726.39
Daily Pivot Point S2	1717.81
Daily Pivot Point S3	1711.77
Daily Pivot Point R1	1741.01
Daily Pivot Point R2	1747.05
Daily Pivot Point R3	1755.63

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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