The price of gold (XAU/USD) pulled back late on Thursday after momentarily rallying to extend the current monthly gains towards $1,520. The price of the yellow metal has been on a bullish run since the start of the month after bottoming at about $1,460.
Gold price is currently on a recovery journey following the massive plunge that occurred September 25 and October 1, and the latest pullback puts a halt on the rebound going into Friday.
Gold Price Fundamentals Overview
From a fundamental perspective, the price of gold is trading at the back of a busy week in the global financial markets. The latest rally is probably driven by the recent US manufacturing data which missed expectations.
On Tuesday, the US ISM Manufacturing PMI for September plunged to the lowest level in 10 years in the process sending the US treasury yields plunging. The latest reading came in at 47.8 coming short of the 51.0 predicted by analysts.
In Europe, the Spanish GDP missed expectations while Italian CPI also disappointed. German retail sales came short of the consensus estimates and the Swiss GDP missed with 0.0% versus 0.1%.
In general terms, many global markets delivered disappointing data and with the World Bank predicting the global economic growth to slow to 2.6% this year down from 3.0% last year, this will continue to push the price of gold higher.
Gold Price Technical Analysis (the 60-min Chart)
Technically, the price of gold appears to have recently hit overbought levels of the RSI indicator. This triggered the latest pullback thereby creating more profit opportunities for both the bulls and the bears.
As demonstrated using the Fibonacci Retracements, the bulls will be targeting short-term profits at around 23.60% Fib level at $1,517 while the bears will target the 50% and 61.80% Fib levels at $1,497 and $1,488 respectively.
Gold Price Technical Analysis (the Daily Chart)
In the daily chart, the price of the yellow metal appears to be in the process of performing a trend reversal following an extended period of a bullish run. The pair traded bullishly in a widening ascending wedge but now appears to have taken a slightly diving channel, which indicates a bearish sentiment.
Therefore, the bears will be targeting long-term profits at around $1,459 while the bulls will be looking to pounce on any rebound at around $1,532 or higher at $1,557.
In summary, the price of gold appears to be experiencing a short-term bullish bias following this month’s rally. However, in the long-term, the bears appear t have taken control.