Gold Is Stuck Within a Lateral Channel

On Thursday, gold gained more than 1% as the dollar and Treasury rates fell, enhancing the safe-haven appeal of metal in the aftermath of weak U.S. job figures. Spot gold rose by 1.4% to $1,840.97 an ounce, while U.S. gold futures rose by 1.4% to $1,841.2 an ounce.

On the daily chart, the gold price has been fluctuating between support and resistance. From a high of $1,844.69 to a low of $1,837.73, XAU/USD is now trading downward. The yellow metal is trading close to its one-week high from the previous session.

Technical Perspective

The daily chart for XAUUSD indicates that it may continue to rebound, however the prognosis is not favorable. The precious metal is passing over a directionless 200 SMA while remaining below the shorter 20 and 100 SMAs, with the shorter one firmly pointing southward. In the meanwhile, technical indicators are rebounding marginally inside negative levels with minimal bullish momentum.

The near-term outlook is optimistic, but the upward impetus has started to wane. The 4-hour chart reveals that technical indicators have leveled off inside positive territory, stabilizing near daily highs. Gold is rising above a modestly bullish 20-day simple moving average, but a bearish 100-day simple moving average presents dynamic resistance near $1,856.35.

Fundamental Overview

After reaching an intraday high of $1,849.18, the gold price is trading over $1,840 per troy ounce on Thursday. After surging on Wednesday, the dollar has reversed direction and is falling against the franc across the board. However, stock market activity remains turbulent. European indices finished in the red, while US indices are mixed, with the DJIA trading substantially lower but the Nasdaq Composite in the green.

Overall, lackluster US data has impacted on the dollar, although extreme overbought conditions may have contributed to the current dip. Undoubtedly, investors continue to seek safety despite the global crisis. As policymakers walk a tightrope to avert economic decline, inflation is their primary source of anxiety. Certainly, tensions between Europe and Russia are not helping to boost market sentiment.

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