Despite Steeper Yields, Gold Price Climbs Back To $1,792

Gold is regaining its footing during Tuesday’s European session, as bulls eye a test of the important $1,792 supply zone.

The risk-off trade and the mood-driven decline in the US Dollar are aiding the Gold price recovery. Nevertheless, further gains remain elusive in the face of the advance in Treasury yields and European indexes.

The euphoria encompassing the Omicron COVID strain, paired with China’s recent stimulus efforts, augers well for risk sentiment.

Fundamental Outlook

The next significant data point for Gold is the US Unit Labor Cost data, which will be released amid a thin docket. Meanwhile, Gold’s price will continue to be influenced by COVID updates and yield price activity.

Gold (XAU/USD) solidifies intraday losses on Tuesday’s early European morning, recovering from the daily low to $1,779 from the previous day’s low.

Even so, bullion continues to battle for direction due to a lack of significant data/events and tentatively hopeful markets ahead of Friday’s release of the US Consumer Price Index (CPI).

A lack of notable virus-related deaths and hopes for a cure for the COVID-19 strain appears to be keeping the market optimistic despite a dearth of major data events, particularly when China and Australia triggers are released.

The People’s Bank of China’s (PBOC) Reserve Ratio Requirement (RRR) activities and Japan’s preparedness for record stimulus were both on the same page.

While US bond rates and stock futures continue their week-start rally, the US Dollar Index (DXY) battles to recover, falling 0.05% intraday to about 96.23 at the moment.

While the risk-on environment benefits Gold prices, the recent increase in US inflation expectations, as assessed by the 10-year breakeven rate of inflation as reported by the St. Louis Federal Reserve (FRED), adds to the pressure on Gold prices.

However, the absence of significant data or events may limit short-term Gold swings, at least until Friday’s release of the US Consumer Price Index (CPI). Following that, the Federal Reserve’s meeting next week will be critical to monitor.

Analysis Of The Technical Aspects

XAU/USD CHART Source: Tradingview.com

Gold is within a two-week-old falling trend range after breaching a rising support line from late September, which is now resistance near $1,795.

Nonetheless, the recent rebound falls short of the 50-SMA level of $1,785, implying another slide towards the channel’s support line, which is located near $1,760. A September upward sloping trend line reinforces the $1,761 support.

It’s worth mentioning that even if Gold buyers clear the aforementioned hurdles, particularly $1,785 and $1,795, they will need to surpass the 200-SMA level at $1,810 for conviction.

If Gold bulls can maintain control above $1,810, $1,817, and the early November bounce high near $1,832, they will be able to challenge the July and September peaks near $1,834.