Gold bounces from near-four-week low, recovers above $4,400

After a rebound in US trading on the previous day, gold opened higher on the current session. The metal had dipped to a near-four-week trough of $4,282 during the week but recovered to around $4,420. The reasons behind the bounce and the technical outlook are examined.

• The fundamental push: Over the past week, escalating bond yields worldwide have weighed on gold. Since gold earns no interest, higher yields reduce its appeal. Additionally, a firmer dollar has also pressured the metal.
• The technical play: Since the Jackson Hole event, gold's decline has taken it below both the 100- and 200-day moving averages. The fall halted near the 50.0 Fibonacci retracement of the July–August uptrend. That level has drawn buyers in, but gold still needs to regain upward momentum.
• Key risk levels to watch out for: The 100-hour moving average, now near $4,428. If gold stays below that level, sellers maintain near-term dominance.
• Key risk event to watch out for: The US non-farm payrolls report due tomorrow.

Over the past week, rising bond yields globally had driven gold lower, also boosting the dollar. However, yields pulled back on the previous day, giving gold some respite. The yield retreat has helped gold erase many of its weekly losses.

The bounce was supported technically by the 14 August low at $4,311 and the 50.0 Fibonacci retracement of the July–August move at $4,328. These two levels now serve as important downside references for gold.

That does not signal a sustained upward move, however.

In the near term, the 100-hour moving average at $4,428 is a key hurdle. Bullish momentum requires a break above that to counter the bearish trend from last week.

Even above that, resistance lies at the 200-hour moving average near $4,528, close to the 200-day moving average at $4,532. These levels could cap any advance before the weekend.

The key upcoming event is the US jobs report on Friday, which could influence bond yields and, consequently, gold prices.