- Gold recovery remains limited below $1,900 area.
- XAU/USD has been buoyed by USD weakness with risk appetite picking up.
Gold futures have attempted to shrug off the bearish pressure suffered earlier this week to stage a moderate pick up on Thursday and Friday. The yellow metal, however, has been unable to extend its recovery beyond $1,896 in a cautious market atmosphere.
Gold, attempting to set a bottom at $1,850
XAU/USD has ticked higher on Friday, in an attempt to breakthrough the three-day consolidation period that followed Monday's 4.5% sell-off. News reporting that the COVID-19 vaccine developed by Pfizer was 90% effective boosted appetite for risk at the week’s opening and sent gold futures tumbling.
Bullion prices dropped to $1,850 later on, where they found support at four-month lows, to consolidate below $1,880/90 during the last three days. Gold remained moving sideways with risk sentiment fading as fears about the economic consequences of the second COVID-19 wave have offset hopes about the progress on the vaccine.
From a technical point of view, XAU/USD should stage a clear breach of $1,900/05 area, extending past the confluence of the 50 and 100-day SMAs. This might increase bullish traction to attack $1,965/70 (September 16, November 6 highs) and $1,990 (September 1 low).
On the downside, any further decline below $1,850 (November 9 low, late September lows) would provide a fresh impulse to the bears and might drive gold prices towards $1,790 (mid-July lows and the 200-day SMA) and $1,750 (June 26 low)
Technical levels to watch
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