The precious metal stays driven by dollar dynamics
The price of gold looks relatively steady these days, struggling around the directionless 20-DMA that continues to cap the upside potential. Earlier in the week, gains for the XAUUSD pair were limited by the $1,675 zone. The precious metal has been pressured since then, albeit the downside momentum looks modest at this stage.
Earlier, the bullion managed to bounce from lows in the $1,617 region due to a weaker dollar. The greenback was pressured across the board due to upbeat risk sentiment in combination with rising expectations for less aggressive tightening by the Federal Reserve. However, the US currency bounced during the previous session as the euro was disappointed by a so-called dovish hike by the ECB.
The central bank raised rates by an expected 75 basis points, but hinted at a slower pace of future increases. Against this backdrop, EURUSD fell back below parity, adding to the dollar recovery momentum.
As such, gold failed to regain the mentioned 20-DMA that has been acting as resistance for nearly three weeks already. The bullion has settled below $1,660 on Friday, looking relatively steady despite the bearish bias. Now, the yellow metal needs to hold above $1,650 in order to avoid a deeper retreat in the near term.
In a wider picture, XAUUSD keeps clinging to the lower end of the longer-term trading range, holding below the key moving averages on the weekly timeframes. Furthermore, a failure to finish October above $1,664 would mark the seventh monthly decline in a row.
On the upside, a decisive break above the $1,700 handle, followed by the descending 100-DMA (today around $1,730) would help ease the selling pressure surrounding gold prices. However, the path of least resistance remains to the downside for the time being.