VOT Research Desk
The gold price has nearly reversed the previous day’s losses, having reclaimed the $1,750 level amid a continued sell-off in the US Dollar (USD) against its main rivals. Markets are bracing for a turnaround on Tuesday, as risk flows return in response to rising Chinese optimism.
On Tuesday, the three-day coronavirus lockdown-induced demonstrations in China subsided. Following the weekend protests, Chinese equity markets recovered strongly on hopes that the government may relax its zero-Covid policy even further.
China’s authorities announced fresh property market measures, while tweets from the Global Times claimed that the government would abandon its tough zero-Covid policy sooner.
These Chinese moves boosted risk sentiment, causing the US Dollar to fall sharply following its remarkable comeback on Monday.
Gold Technical Analysis
On Monday, gold failed to hold above $1,747, the 23.6% Fibonacci Retracement (Fibo) level of the recent rise from the November 3 low of $1,617.
The decline also caused gold to close the day below the rising (dashed) trendline support, which was then at $1,744.
Buyers, on the other hand, found support near the $1,740 level once more, triggering a comeback rally above the $1,750 mark this Tuesday.
As a result, the gold price has reclaimed the 23.6% Fibo level as well as the rising trendline support-turned-resistance, which are now at $1,747 and $1,749, respectively.
The $1,660 round figure represents the next upside barrier. Acceptance above the latter is essential for triggering the additional recovery toward $1,770.
The 14-day Relative Strength Index (RSI) is rising above the midpoint, supporting the renewed uptrend.
On the other hand, the downside is expected to be softened as long as the $1,740 level is held.
The bullish 21-Daily Moving Average (DMA) at $1,728 will be the next level of resistance.
Gold bears will have to beat the $1,722 strong support level. This is the intersection of the 38.2% Fibo level and the November 23 low.
