The precious metal runs a noteworthy four-week recovery, trying to end its four-month losing streak, as the US Dollar rally has paused. It has covered more than half of its June High/July Low plunge and has registered a series of higher high during the current month.
This gives it the chance to try to enter into the daily Ichimoku Cloud, with the lower border seen in the 1,804-1,807 region. However, the technical landscape has become tougher and a strong catalyst will be required for a break above the upper border and the 200Days EMA (at around 1,827), which would bring 1,880 in the spotlight.
Despite the solid rebound and the recent higher highs, the Relative Strength Index (RSI) has been diverging lower, something that could potentially mark the end of Gold's recovery. Today, XAU/USD is soft and this creates risk for a return below the EMA200 and towards 1,754, that would pause the upside momentum. A steeper decline that would challenge 1,711-0 though, has a higher degree of difficulty in the short term.
In any case, the next leg of the move, will likely be determined by today's US inflation report, which can spur volatility and weigh on the Fed's tightening path.
Senior Market Specialist
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.
With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.