Spot gold appears ready to extend the uptrend with long wicks emerging near the previous resistance area.
In case you missed it, risk aversion was the name of the game yesterday as traders fretted over global growth and the possibility that the Federal Reserve would need to cut interest rates further to avoid a hard landing.
US 10-year Treasury yields fell sharply even as the safe-haven US dollar remained at multi-day highs.
Gold (XAU/USD) 4 hours Chart by TradingView
Spot gold, which had turned lower from an all-time high of $2,525, bottomed at $2,475 before clawing its way back into the $2,500 area.
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Will the price of gold continue its months-long rise this week?
Note that the XAU/USD pair found support from the S2 pivot point area ($2,473) which coincides with a major resistance level in late July and early August.
Further bullish candles and sustained trading above the S2 and S1 pivot point lines could set up the XAU/USD pair for a potential bounce from the 100 SMA on the 4-hour chart. If there is enough momentum, the precious metal could return to its previous highs at $2,525.
However, if this week’s themes push the USD higher, or if the previous resistance area does not hold as support, XAU/USD could return to lower interest areas. Gold prices could fall to $2,450 near the 200-day SMA or to $2,440 levels closer to longer-term trendline support.
What do you think? Which direction will gold prices head in the upcoming trading sessions?