Gold Price Bounces Off the 20 Daily SMA As USD Turns Lower

Gold has been retreating lower since printing a new record high in the last week of September, but the retreat might be over now after the bounce yesterday. The price met the 20 daily SMA at $2,600 lows, which held the decline and yesterday the price bounced $25 higher above $2,630.

XAU has seen massive gains in 2024, as global geopolitical tensions have remained high and central banks have started easing the monetary policy, which sends yields lower. As a result, Gold has kept making new record highs every week almost, but we’re in a retracing phase.

Gold Chart Daily – Retreat Seems Complete After Breaking the Triangle Pattern

Since late September, gold has been consolidating in a triangle pattern marked by rising lows and falling highs. However, earlier this week, the price broke below this triangle, dropping to $2,604—its lowest point in two weeks. This move was largely influenced by a broader USD rally, as stronger U.S. employment data hinted at a pause in the Fed’s rate-cutting cycle. Yet, despite a boost from September’s higher-than-expected inflation data, the USD rally lost momentum yesterday.

Mixed Economic Data Fuels Market Uncertainty

Inflation data showed an annual CPI rise of 2.4%, slightly below the previous 2.5% increase but still above the 2.3% forecast. Core CPI also climbed by 3.3%, exceeding both the market’s 3.2% estimate and August’s figure. On a month-over-month basis, CPI increased by 0.2%, compared to the anticipated 0.1%. Meanwhile, initial unemployment claims rose to 258,000, higher than the 230,000 forecast, sparking renewed concerns about the U.S. labor market’s strength. As a result, the USD declined, while gold rebounded back toward the $2,600 level.

Bullish Technical Indicators for XAU/USD

Technically, gold is showing signs of a potential reversal. The 20-day SMA is holding as support, and the stochastic indicator has entered oversold territory, hinting that the recent decline may be complete. While the XAU/USD chart suggests a possible return to record highs, much will depend on both broader market sentiment and any developments in Middle Eastern geopolitical tensions.

Gold Live Chart