Gold (XAU/USD) has seen a solid recovery this week after a disappointing start on Monday. The precious metal opened the week at $2,636.99 but found solid support near the 38.2% Fib retracement level of last week’s rebound, as price action never dipped below $2,630 before buyers stepped in.
The early dip was followed by a tussle around the key hourly moving averages, with gold closing at $2,663.07, up 1.99% from its Monday low of $2,634.07.
Picture: The day’s high touched $2,666.25, pushing the precious metal firmly above both the 100-hour and 200-hour moving averages, as seen on the VT Markets app.
Currently, gold is still down by just 3% for the month, and despite that, it remains on track for its third monthly decline in 14 months, following a strong rally throughout the year.
Even with the slight dip, gold buyers continue to show up on any dips, which is a positive sign for bulls.
Looking ahead to December and January—typically strong months for gold—the seasonal tailwind could provide some upside potential, even though gold has already surged by nearly 30% this year.
Whether the precious metal will continue to rise based on seasonal factors alone remains to be seen.
Key risks to gold’s continued strength include potential market volatility tied to political developments, notably the incoming U.S. administration in January 2025.
However, as seen throughout this year, gold has managed to rally strongly, irrespective of shifts in the macroeconomic outlook or political shifts.
While the Fed’s policy stance and potential rising Middle East and Black Sea tensions will be important to monitor, gold’s structural bullishness continues to provide a solid argument for further gains in the near term.
So, despite recent fluctuations, gold remains in a strong position to keep moving higher as it builds on its upward momentum.
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