Gold down but not out while above the $1,800 mark

Gold price put up a good show on Tuesday, by extending the previous rally to reach a new monthly top at $1,820. Sellers, however, continued to lurk at higher levels, triggering a sharp pullback in gold price to $1,805 levels.

Tuesday’s sharp correction from the monthly top saw gold price confirming a rising wedge breakdown on the four-hour chart, as the rising trendline support at $1,813 gave way. Gold buyers, however, remain hopeful as the Relative Strength Index (RSI) sits above the central line. Therefore, gold price is seen defending the horizontal 200-Simple Moving Average (SMA) at $1,805, as of writing.

A four-hourly candlestick close below the latter will resume the corrective decline, calling for a test of the upward-pointing 50-SMA at $1,800. The next downside target is envisioned at $1,790, the mildly bullish 100-SMA.

On the flip side, gold traders need a firm break above the 21-SMA at $1,808 to strengthen the recovery momentum. Acceptance above that barrier will fuel a fresh upswing towards the wedge support-turned-resistance at $1,816. Bulls will then aim for the monthly peak of $1,820 on the road to recovery.

Fundamental Overview

Gold price is consolidating Tuesday’s heavy losses on Wednesday, defending the $1,800 mark amid a mixed market sentiment and weaker Treasury yields. Latest studies continue to show that the Omicron variant is less severe, which counter reports of surging cases and hospitalizations in Australia and Europe. Investors keep reassessing the Omicron risks to the economic growth, leaving gold price hovering a narrow range so far this Wednesday. Later in the day, a set of second-tier US economic releases will offer fresh trading opportunities, as slowing volumes into the year-end holiday break could likely exaggerate the gold price action.