By Ahmad Assiri Research Strategist at Pepperston
Gold has established a respected support base around the $4,000 oz level, repeatedly retesting this zone in a sense that has built market confidence and encouraged renewed buying interest. This s relative stability is further reinforced by the 50 day moving average which now converges with the same key resistance area
The period of one way positioning in gold has largely passed following the sharp rally that carried prices toward the $4,400 range. With that upper ceiling now in place, traders are refocusing on the tighter price channel defined by $4,200 on the topside and $3,930 on the downside, with price action expected to largely cluster around the moving average referenced above
This setup remains constructive for two way traders in the yellow metal. The recent fast paced bullish move had pressured short sellers significantly but the current setup is notably less volatile. Conditions now offer breathing room for more balanced risk management, with a high probability that gold continues to trade within this narrower price channel over the near term.