With the dollar rebounding slightly, gold is down 1% and more importantly back below the $2,500 level. The price is still above the previous triple top pattern at around $2,480, but buyers are hoping for a more convincing push above the figure to reinforce the breakout case.
Gold (XAU/USD) Hourly Chart
Instead, the focus of price action is now shifting towards the short-term chart as shown above.
A break below $2,500 would send gold back to test its 200-hour moving average (blue line) and buyers are holding on to it for now. If we hold above this level, buyers will remain in the market as we look to close the week. But if the price breaks below this level, sellers will start to regain control in the near term for the first time since early August.
The key event to watch in the coming days is the appearance of Federal Reserve Chairman Jerome Powell. This will have a significant impact on the sentiment of the dollar and bond markets.
As such, gold will have to deal with the reaction to this to end things this week. For now, the price action is settling into a more neutral spot in the near term. This is given that we are seeing prices return to trading between their 100 (red line) and 200 hourly moving averages. We are also keeping an eye on the $2,500 level.
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