Gold Above $2,400 As Market Mood Improves, but Faces Resistance

Gold tumbled lower early this week, falling to $2,364.34 by Monday morning, but today we are seeing some bullish action with XAU above $2,400. However, Gold buyers are facing resistance above, such as the 200 SMA which rejected the price in the first attempt.

Today, the markets are trading in a calmer manner compared to the last few days, as a result of the recovery in risk sentiment, with safe haven currencies continuing their retreat in the Asiana and European sessions, but they have stagnated in the last few hours. The BOJ Deputy Governor Uchida ruled out rate hikes as long as markets were “unstable,” which contributed to the calmness. This decision breathed new life into the safe have pairs, with USD/JPY surging over 3 cents and almost reaching 148.

Later, he clarified that he still aligned with BOJ Governor Ueda, noting that recent volatility had increased uncertainties about their next steps. This contributed to the Yen dropping back to 146 lows before reversing to climb above 147 again. Overall, the dollar remains somewhere in the middle compared to the rest of majors currencies, holding stronger against the safe havens, with USD/CHF above 0.86 as market anxiety decreases, despite declining against commodity dollars.

In the equity market, European markets are reporting gains of well over 1%, while US futures opened with a bullish gap. This indicates optimism in financial markets, which is helping Gold on a trade-reversal, but it might change once US traders begin trading; recent bearish days have started with the Nikkei’s collapse in the Asian session.

Gold Chart H1 – The 200 SMA Has Turned into Resistance

On Friday, gold almost hit its all-time high from last month, but it quickly plummeted below $2,400 today. Thankfully, around $2,364, the 50-day Simple Moving Average (SMA) stopped the decline. Positively, early gold buyers entered the market, as XAU increased by more than $50 and returned above $2,400. On the daily chart, buyers are currently up against the 200 SMA (purple), which is refusing to give up.

Gold Live Chart