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XAU / USD remains capped below the $ 1,900 area

  • The recovery for gold remains limited below the $ 1,900 area.
  • XAU / USD has been fueled by USD weakness with a rebound in risk appetite.Gold futures have opened the week on a positive note, helped by a slightly lower US dollar amid a more optimistic market environment. The yellow metal has bounced to a low of $ 1,896 to recoup losses on Friday, but cannot confirm above the $ 1,900 / 20 resistance level.

Gold rises, dollar weakens as market sentiment improves

XAU / USD has regained most of the ground lost on Friday, driven by a weak US dollar amid heightened hopes for a fiscal stimulus deal in the US House Speaker Nancy Pelosi, He suggested on Sunday that, despite ongoing differences between the two parties, a new package could be pushed through before the presidential elections. This has boosted confidence in the opening of the week.

Additionally, drug giant Pizer has reported that a COVID-19 vaccine could be ready by the end of the year, which has helped further boost market sentiment, increasing selling pressure for the safe-haven dollar. .

The precious metal, however, has not achieved a substantial breakout and remains trading sideways at previous days’ levels. Upward movements have remained capped below the $ 1,900 / 20 area, right where the downtrend line resistance lies from the mid-August highs.

The 4-hour chart shows that XAU / USD is unable to extend gains beyond $ 1,915 / 20 (trendline resistance and 200 SMA). Above here, the bullion could find resistance at $ 1,935 (Oct 11 high) before targeting $ 1,960 (Sept 18 high).

On the downside, initial support is at $ 1,897 (Oct 16 low) and below here $ 1,880 (Oct 8, 14 lows) and $ 1,870 (Oct 7 low).

4 hour chart

Credits: Forex Street

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