Gold Recovers Towards $4,400 as Technical Breakdown Fails to Materialize

Gold has recovered somewhat over the past two days, with prices approaching the $4,400 level again.

A calmer environment in broader markets is partly behind the move. Oil prices have retreated, and the 10-year Treasury yield has fallen below 5%, relieving some pressure on gold following the volatility around the Fed's meeting earlier this week.

Additionally, technical factors also explain gold's behavior since the Fed decision.

Earlier in the week, gold was close to breaking the neckline support in the $4,290-$4,310 area, and there was a risk of a more decisive move lower right after the Fed announcement.

However, buyers intervened, sparking a rebound after gold briefly touched the $4,240 zone, which aligns closely with the 61.8% Fibonacci retracement level of $4,241 from the July-August rally.

That level held, and buyers have since moved the price back above $4,328, the 50% Fibonacci retracement, and also above the 100-day moving average at $4,321. Technically, this changes the daily chart bias to a more neutral stance, further negating the earlier downside breakdown.

The recovery has accelerated today from that point.

The hourly chart is also improving, as gold buyers have recaptured ground above the key short-term moving averages. This is leading to another attempt at the $4,400 area for the first time in a week.

The $4,400-$4,415 zone will be the initial challenge for further gains, as buyers aim to solidify the short-term bullish bias. Above that, the 200-day moving average near $4,541 poses a more significant technical hurdle.

For now, it is prudent not to get too ahead of the situation.

Gold is still in a volatile consolidation phase after declining from almost $4,700 in August. While the technical outlook has improved over the past two days, buyers still need to do more to confirm a stronger rebound.

On the downside, the initial key risk level to watch is the 100-day moving average and the 50% Fibonacci retracement in the $4,328-$4,331 area. Below that, a drop under $4,241 would be required to generate more selling pressure and open the door for a possible decline to $4,000. However, it's best to proceed step by step.

Oil prices have cooled but remain just above $100, and the 10-year Treasury yield, while not surging, is hovering just below 5%. It is too early to become overly optimistic about the macroeconomic environment simply because markets have been somewhat calmer following the Fed decision.