Spot gold (XAU/USD) just closed its biggest weekly bullish candlestick since mid-August!
Can the commodity extend its gains? Or are we looking at a pullback opportunity?
I’m taking cues from the 4-hour chart!
Spot Gold (XAU/USD): 4-hour
Spot Gold (XAU/USD) 4-Hour Chart
Spot gold has been on a downtrend since March this year when gold sellers defended the $2,000 major psychological handle.
It also didn’t help the precious metal that the Fed started raising its interest rates at the time and has been keeping up (and even stepping up) its tightening efforts since.
Gold prices found some relief last week when the U.S. Treasury yields eased from their notable highs and some traders turned to the non-yielding safe-haven amidst global growth concerns.XAU/USD bounced from a low near $1,620 and is now trading closer to the $1,670 area.
Can spot gold extend its upswing?
The 4-hour chart says “nah, prolly not.”
As you can see, $1,670 lines up with the trend line resistance of a descending channel as well as the 50% Fibonacci retracement of September’s downswing.
The 100 SMA is also juuust above current prices and, based on its direction and distance from the 200 SMA, it looks like the sellers haven’t lost their mojo just yet.
This week’s U.S. NFP reports could also turn the markets’ focus back on the Fed’s tightening schedule.
If this week’s U.S. labor market numbers print higher net job additions and steady to accelerating wages, then the Fed will have more room for a 75bps interest rate hike in November.
XAU/USD could bow to further dollar gains and revisit last week’s lows. It could even make new 2022 lows!
This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to make sure you understand the risks involved.
