The 200-DMA acting as the immediate resistance just below the $1,800 figure

Gold prices bounced from fresh July lows registered around $1,1764 on Monday as the precious metal got a reprieve amid broad-based weakness in the greenback. Still, the bullion remains on the defensive being under broader pressure as risk-on sentiment continues to dominate global financial markets. After the biggest monthly fall in four years, gold started December on an upbeat note, however, the recovery could be short-lived and unstained as positive vaccine developments and US stimulus hopes further support positive investor mood. 

The yellow metal seems to see a bumpy road to recovery at this stage, with the 200-DMA acting as the immediate resistance just below the $1,800 figure. Rising hopes for an imminent vaccine rollout could dent the current recovery in prices and even send the bullion to fresh multi-month lows in the days to come as investor optimism diminishes gold’s attractiveness as a safe-haven.

From the technical point of view, gold has neared the overbought conditions, suggesting the prices could be close to bottoming out. However, the precious metal could resume the broader uptrend if risk sentiment deteriorates in broader markets. Otherwise, the $1,725 region will come into market focus for the first time since June.

On the weekly charts, the prices are well below the flattish 20-SMA. However, the RSI in the same timeframes is getting neutral following the recent decline, which implies that the selling pressure surrounding the bullion could ease in the medium term.

On the weekly charts, the prices are well below the flattish 20-SMA. However, the RSI in the same timeframes is getting neutral following the recent decline, which implies that the selling pressure surrounding the bullion could ease in the medium term.

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