- Gold appreciates for the second consecutive day, and nears key resistance at $4,045.
- Risk appetite is weighing on the US Dollar and supporting precious metals on Thursday
- Technical indicators suggest that Gold’s upside momentum is weak.
Gold (XAU/USD) is trading higher for the second consecutive day on Thursday, favoured by a somewhat softer US Dollar. The precious metal has returned above the $4,000 psychological level, and is trading at session highs near the top of the last two weeks’ trading range, at $4,045, at the time of writing.
The US Dollar Index (DXY) has pulled back from its multi-month highs, weighed down by lower demand for safe assets as risk aversion has eased. Grenbeck’s downside attempts, however, remain limited, as the strong US employment and services activity data released on Wednesday cast further doubt on immediate Fed rate cuts.
Technical Analysis: Resistance at $4,045 keeps the bearish bias in play
XAU/USD 4-Hour Chart
Technical indicators suggest a frail upward momentum, with the 4-hour Relative Strength Index (RSI) positioned just above the key 50 level. At the same time, the Moving Average Convergence Divergence (MACD) continues to fluctuate around the signal line, indicating a lack of a clear bias.
Bulls need to breach the $4,045 resistance area (October 29, 31 highs) to confirm a trend shift and turn the focus toward the $4,150 area (October 23 highs). Further up, the next target would be a previous support area ahead of $4,220, which held bears on October 17, 19, and 20.
A bearish reaction from current levels, on the contrary, would bring the $3,930 area (October 30, November 4, lows) back to the focus ahead of the October 28 low, near $3,890. If those levels are broken, the next target would be the October 2 low near $3,820. That level is a few pips above the measured target of an A-B=C-D retracement from $4,370 highs, which lies at $3,795.
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