Gold managed to regain positive traction on the last trading day of the week and reversed a part of the previous day’s rejection slide from the $1,800 neighbourhood. The commodity maintained its bid tone through the mid-European session and was last seen hovering around the $1,790 region, up 0.40% for the day.
The emergence of some fresh selling around the US dollar was seen as one of the key factors that continued lending some support to the dollar-denominated commodity. Apart from this, concerns about soaring COVID-19 cases in some countries further benefitted the safe-haven XAU/USD and remained supportive.
Looking at the technical picture, last week’s strong move beyond the $1,760-65 resistance zone validated a double-bottom bullish breakout and supports prospects for additional near-term gains. The constructive set-up is reinforced by bullish technical indicators, which are still far from being in the overbought territory.
Hence, a subsequent strength beyond the $1,800 mark, towards the $1,815-16 resistance, remains a distinct possibility. The latter coincides with the 50% Fibonacci level of the $1,959-$1,676 downfall, which if cleared will set the stage for an extension of the recent appreciating move witnessed since the beginning of this month.
On the flip side, the double-bottom neckline resistance breakpoint, around the $1,765-60 region now seems to act as immediate strong support. This is followed by the 23.6% Fibo. level, around the $1,745-44 area and the $1,730 level. Sustained weakness below will negate the positive outlook and prompt some technical selling.
The XAU/USD might then turn vulnerable and accelerate the fall towards challenging the $1,700 round-figure mark. Some follow-through selling would expose the double-bottom support, around the $1,677-76 region, or multi-month lows touched in March.