Gold has been bullish since Friday, October 4, when it reversed at around $1,615 and has put up a great performance during last week. Gold surged and reached a two-month high on Friday and closed at the top, as the figures showed that US inflation cooled off a bit in October, lifting hopes that the Federal Reserve would adopt a less aggressive approach on rate hikes, after the steepest rate hike period in history.

By the end of Friday, Gold was up about 5.1% for the week which was the best performance since March 2020. Gold is very sensitive to the US Dollar as well as the performance of US Treasury yields, both of which went through a small crash after the CPI inflation report last Wednesday.

Gold Weekly Chart – Bouncing Off Support at $1,615

Can the 100 SMA hold as resistance?

GOLD fell below the 200 SMA (purple) on the daily chart, but a support zone formed at around $1,615 which held on several attempts from sellers to push the price below $1,600. In the last two weeks we have seen a bullish reversal, particularly last week.

Although, the surge stopped right at the 100 daily SMA (green) which used to act as support but then turned into resistance immediately in September. Although, after the softer inflation figures in September, a 75-basis point rate hike for December is almost surely off the table. Traders are eyeing a 50-basis point move instead. In terms of Fedspeak, certain policymakers remained cautious in the aftermath of the inflation report. But the language seems to be shifting toward the pace of tightening and just how high rates may have to go.

Gold XAU Live Chart