Gold -recovery picks up after strong downside rejection

Gold price rises for the second consecutive day, as the latest reports of an extension of ceasefire in the Middle East (although with pending approval from President Trump), brightened near-term outlook.

Thursday’s strong downside rejection left bullish daily candle with long tail (initial reversal signal), with failure to break lower (bear-channel support line contained dips) formed a bear-trap under 200DMA that contributes to positive signals.

Fresh extension higher on Friday boosts prospects for completion of reversal pattern and stronger recovery, although with requirements to validate the pattern.

Technical picture on daily chart is still predominantly bearish, but rising RSI approaching pivotal 50 zone and price’s break above 10DMA, fuels optimism, however, fresh bulls need to extend above breakpoints at $4580/85 (May 25/26 tops / 20DMA) to confirm signal and expose important barriers at $4652 (55DMA) and $4685 (bear-channel upper boundary).

Weekly close above 200DMA fuels optimism, although second weekly Doji candle (strong indecision) and third consecutive monthly close in red suggests that recovery attempts will face strong headwinds and that significant changes in geopolitical picture would be needed to fuel stronger moves.

Res: 4585; 4615; 4653; 4685
Sup: 4490; 4453; 4401; 4354