October 11, 2022 18:06:18
Gold prices took a sharp U-turn and reclaim $1,680 on Tuesday. Fundamentally, there is no major shift in the paradigm from a broader perspective, but a short-term recovery is seen in the U.S trading session. The oversold market structure amid short covering in the futures underpins the demand for the precious metal.
The global stock market remained under immense selling pressure. The S&P 500 and NASDAQ recovered mildly after testing levels not seen in more than two years. The move followed after the Federal Reserve Bank of New York’s monthly survey of Consumer Expectations, which showed that the US consumer’s one-year inflation expectation fell to a new 12-month low of 5.4%, down from 5.7% in August’s survey. The US dollar index slipped from the high of 113.50, supporting the gains in the yellow metal.
Investors took a flight to safe haven asset, gold cannot be ruled out in a time of heightened volatility and risk-averse market. The International Monetary Fund warned of a difficult time ahead for the global economy, saying global financial stability risks have increased.
XAU/USD struggles below $1,680
On the daily chart, the XAU/USD price is taking support near the parallel channel from the highs of $1,807 made on August 9. The precious metal slid into the channel and tested the yearly low of $1,620.
However, the spot took a sharp reversal after confirming the formation of an ‘inverted hammer’ formation. Since then the price jumped almost 100 points and made a high of $1,729. But the bulls failed to sustain the gains and turned lower.
This also coincides with the critical 20-day exponential moving average. Thus, keeping pressure on the upside momentum.
Currently, the price hovers near the upper trend line of the channel with an intraday low of $1,661. A daily close above $1,680 would set the momentum for the gain toward $1,700.
In contrast, if the price slices the bearish trend line the gates will be open for $1,620.
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