On October 9, gold (XAU/USD) extended its bullish momentum into a third straight day. It managed to break above the $1900 mark with the precious metal’s bias shifting from bearish to bullish technically. Moreover, the US dollar appears to be dumping as stimulus hopes seem to benefit stocks and gold. President trump’s improving health condition could also be boosting positive sentiment.
One analyst said:
“The main catalyst behind gold’s rally remains the persistent downward pressure on the safe-haven US dollar, as the stimulus hopes continue to underpin the investors’ sentiment alongside the global stocks. House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin restarted the stimulus talks Thursday after President Donald Trump rejected Pelosi’s $2,4 trillion stimulus offer late Tuesday.”
President Donald Trump’s likely return to the public engagements and hopes of a Joe Biden win in next month’s presidential elections in the United States has boosted the market mood. All these scenarios have added some weight to the US dollar. A Biden presidency may point to the possibility of a major stimulus package, according to analysts and experts.
“In evidence of increased investor confidence in the bright metal, Gold-backed exchange-traded funds (ETFs) amassed over 1,000 tonnes of bullion in the first nine months of 2021.”
The technical set up for gold now appears interesting. Its price is on the verge of confirming a falling wedge breakout if it closes the week above the falling trendline resistance that has formed at $1909. This is the zone that coincides with the 21-Daily Moving Average (DMA), and thus, the bulls must battle it out.
Backing the case for a bullish swing, the 14-day Relative Strength Index (RSI) has breached through the midline, and it is currently hovering around 50.28. if a bullish breakout happens, the nearest resistance is 50-DMA at $1939, and it might test the bulls’ commitment as gold aims to return to its record highs of $2075.
On the other hand, the bears may regain control over a failure to validate the upside pattern, and that may open the space for a retest of the crucial 100-DMA support located at $1862.