Despite the recent recovery, gold remains vulnerable and could suffer steeper losses
Gold prices came back under the selling pressure on Thursday following three days of marginal gains. The precious metal has retreated from the $1,930 area while holding above the $1,900 area. Despite the bearish momentum looks limited, the pressure could mount if the dollar recovery momentum accelerates. In this scenario, the bullion could turn the $1,900 handle into resistance again.
The dollar has been trimming losses since the start of the day, shifting into a recovery mode after a steep sell-off witnessed on Wednesday. The USD index is off more than one-month lows but stays vulnerable to further losses as market sentiment remains unstable.
The overall market volatility could pick up ahead of the November 3 election. Against this backdrop, gold prices could get out of the current trading range in either direction. For now, the bullion is stuck between the ascending 100-daily moving average (at $1,878 today) and the $1,933 handle that capped upside attempts earlier this month.
Despite the recent recovery, gold remains vulnerable and could suffer steeper losses as the greenback seems to be more attractive as a safe-haven asset for the time being. In the immediate term, the prices are nearing the 20-daily moving average that arrives just below the $1,900 figure. Once below this level, the yellow metal could target the $1,885 intermediate support. In a wider picture, the mentioned 100-daily moving average continues to act as the key support zone. As long as gold stays above it, downside risks are limited.
On the upside, the metal needs to make a decisive break above October highs in the $1,933 area in order to see a sustained bullish momentum. Then, the $1,970 region will come back into the market focus for the first time since mid-September. This area could cap the potential bullish movement as it represents a strong resistance zone.