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Gold Technical: At the risk of further corrective decline before potential recovery – MarketPulse


  • Gold’s stagflation hedge purpose has been negated after a rotation back into long-duration risk assets/equities.
  • Watch the US$1,972 key short-term resistance on spot Gold (XAU/USD) to maintain on-going corrective decline structure.
  • Medium-term uptrend remains intact as long as US$1,903 support holds.

In the past two weeks, the price actions of Spot Gold (XAU/USD) have started to lose some of their glitter as a safe haven play due to the “status quo” situation in the ongoing Israel-Hamas conflict without any further rise in the geopolitical risk premium at this juncture.

Also, a rotation back into long-duration risk assets such as the US mega-cap technology and growth-oriented equities ex-post FOMC Fed Chair Powell’s press conference and the lacklustre US non-farm payrolls and US ISM Services PMI data for October where the Nasdaq 100 recorded a weekly gain of +5.07% last week may have put a damper on gold’s stagflation hedge purpose.

Broke below its 20-day moving average with a minor bearish “Head & Shoulders”

Fig 1: Spot Gold (XAU/USD) medium-term trend as of 9 Nov 2023 (Source: TradingView, click to enlarge chart)

Fig 2: Spot Gold (XAU/USD) minor short-term trend as of 9 Nov 2023 (Source: TradingView, click to enlarge chart)

The medium-term uptrend phase of Gold (XAU/USD) has remained in place since its 6 October low of US$1,810 as its price actions continued to trade above its key 200-day moving average and the pull-back of its former descending channel resistance now acting as a support at US$1,903.

In the short term, Gold (XAU/USD) is likely in the process of undergoing a corrective decline or pull-back sequence to negate the overbought condition of its recent steep rally of +11% from its 6 October low to 27 October 2023 high.

Watch the US$1,972 key short-term pivotal resistance for a further potential slide toward the intermediate support zone of US$1,932/1,920 (50, 200-day moving averages & the exit target potential of the minor bearish “Head & Shoulders” breakout).

Failure to hold at US$1,920 may extend the corrective pull-back towards the key medium-term support of US$1,903 (the pull-back of the former descending channel resistance from the May 2023 high & and close to the 50% Fibonacci retracement of prior rally from 6 October low to 27 October 2230 high).

On the flip side, a clearance above US$1,972 invalidates the corrective pull-back scenario to jumpstart potentially another bullish impulsive upmove sequence towards the minor range resistance of US$2,006 before the next incoming intermediate resistance zone at US$2,028/2,037.

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Kelvin Wong

Based in Singapore, Kelvin Wong is a well-established senior global macro strategist with over 15 years of experience trading and providing market research on foreign exchange, stock markets, and commodities. Passionate about connecting the dots in the financial markets and sharing perspectives around trading and investment, Kelvin Wong is an expert in using a unique combination of fundamental and technical analyses, specializing in Elliott Wave and fund flow positioning, to pinpoint key reversal levels in the financial markets. In addition, over the last ten years, Kelvin has conducted numerous market outlook and trading-related seminars, as well as technical analysis training courses, for thousands of retail traders.

Kelvin Wong

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