After 5 days of performing a bearish action until it reached the support zone of 1720.00, suddenly the price of gold returned to vigor to test the SBR zone (support become resistance) around 1760.00.
The surge has also resulted in an increase of over 400 pips in yesterday’s New York session before declining again and moving horizontally in today’s European session (Friday).
The strengthening of gold prices is likely to be influenced by market sentiment which saw little profit -taking activity against the US dollar at the end of September trading.
The price movement is expected to show violent action in tonight's New York session where the US manufacturing PMI data from the ISM survey will be published.
In addition, Federal Reserve (Fed) Chairman Jerome Powell’s statement awaiting the publication of US NFP employment data before implementing policy tightening measures has annoyed investors.
Based on the XAU/USD price chart, the price is seen to have managed to break the Moving Average 50 (MA50) barrier level to give a shadow of the impending trend change.
The RBS (resistance become support) 1740.00 zone will be the investor's focus level to assess whether the price will make the latest HL (higher low) or continue to decline lower.
A further decline will see the gold price move back towards the support zone of 1720.00 which is the level that has re -supported the price surge yesterday.
Investors will also be watching for the impending reaction in the SBR 1760.00 zone in anticipation of a clearer bullish signal and is expected to head to the next SBR 1780.00 zone.
