- The risk aversion momentum in the markets extended some support to gold – safe haven.
- Higher US Treasury yields, modest USD strength limited the upside for the metal.
- The bulls should wait for a move beyond $ 1,800 before placing new bets.
The oro (XAU) it reversed a fall at the beginning of the American session towards the $ 1,776 area and turned positive for the third consecutive day, although it remained below the weekly highs touched earlier this Thursday. Currently hovering around the $ 1,782-83 zone, the risk aversion momentum in the markets turned out to be a key factor acting as a tailwind for the safe-haven precious metal.
Investors became nervous amid fresh concerns about possible contagion from the Evergrande debt crisis in China. The heavily indebted developer said Wednesday that a $ 2.6 billion stake in its real estate services unit failed. However, market reaction, so far, has been limited amid reports that Evergrande won an extension of more than three months for the maturity of a $ 260 million bond. Furthermore, Chinese officials said that the problems in the sector would not be allowed to escalate into a full-blown crisis.
technical perspective
From a technical perspective, the bulls could still wait for a sustained move past the $ 1,800 confluence hurdle before placing new bets. The aforementioned zone comprises the technically significant 100/200 day SMA, which if decisively exceeded will set the stage for additional gains. The next relevant barrier is pegged near the $ 1,808-10 region, above which gold appears poised to accelerate momentum to challenge the $ 1,832-34 high supply zone.
On the other hand, any significant pullback is likely to find decent support near the $ 1,775 area. Some follow-up weakness could drag gold prices towards the $ 1,763-60 region. Failure to defend the aforementioned support levels would negate any positive short-term bias and lead to aggressive technical selling. This, in turn, will expose the $ 1,750 support zone before XAU / USD finally drops further towards September’s monthly lows, around the $ 1,723-21 region.
Levels to watch
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