XAU/USD : More Fall Ahead ? (READ THE CAPTION)Analyzing the #Gold chart on the 4-hour timeframe, we notice that today’s market opened with a positive price gap between $2563 and $2566 . These types of gaps often act as magnets for price action, as markets tend to fill such gaps over time. Based on the current bullish momentum, I expect a price correction in the near future to fill this gap.
Looking deeper into the structure, we can see that gold’s recent rally has managed to fill the Fair Value Gap (FVG) from the previous bearish move to a significant extent. However, it still has room to climb and fully fill the gap at $2606. This level could serve as a critical zone where we might observe a strong price reaction . Keep this level on your radar—it could either confirm a continuation of the bullish trend or trigger a reversal.
From a broader perspective, the ongoing geopolitical tensions in the Middle East and the Ukraine-Russia conflict continue to provide a safe-haven bid for gold. These factors have been instrumental in driving demand, even as the US dollar shows signs of consolidation after its recent strength.
On the macroeconomic front, recent data showed strong US retail sales for October , indicating resilience in the economy. However, there’s growing uncertainty around the Federal Reserve's policy direction. Markets currently price in a 65% probability of a 25bps rate cut in December, which could weigh on the dollar further and provide support for gold in the medium term.
From a technical standpoint:
1. Gold remains in a bullish structure, but short-term corrections are expected due to overbought conditions and the need to fill the gap at $2563-$2566.
2. The $2606 level acts as a magnet for price, as it marks the full closure of the previous FVG. Monitor this level closely for signs of rejection or continuation.
3. In case of a rejection at $2606, a retest of support levels near $2545-$2550 could be on the cards, aligning with the gap fill.
Key Levels to Watch :
- Support: $2563 (gap low), $2545
- Resistance: $2606 (FVG top), $2620
To summarize, while gold’s rally has been impressive, the presence of both the unfilled gap below and the remaining FVG above suggests that the market could be at a pivotal point. Watch these levels carefully, as they are likely to guide gold’s next move.
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Best Regards , Arman Shaban
