World gold prices recovered after a strong correction last week, returning above the 4,400 USD/ounce mark at 9:00 am on September 8 when buying power reappeared. Technical signals show that the 4,225 USD/ounce zone is an important support for the precious metal.
According to the World Gold Council (WGC), gold prices according to LBMA PM standards have decreased by 3.2% in the past week, to 4,415 USD/ounce, causing the increase from the beginning of the year to narrow to about 1%. However, after a sharp decline, gold prices are finding buying power again and fluctuating around the 4,400 USD/ounce range.
Notably, gold buying through global ETFs has accelerated in the past week. According to WGC, while net buying positions on gold futures contracts slightly decreased, cash flow into gold ETFs improved. This development shows that investment demand for precious metals is still maintained after the adjustment.
Technically, gold prices are currently still below the 200-day moving average, around 4,534 USD/ounce. This is an important resistance zone. According to WGC, if the closing price exceeds this moving average, the short-term trend may turn positive again.
In the opposite direction, the 55-day moving average is currently around 4,225 USD/ounce and is assessed by the WGC as an important support zone. If gold continues to maintain above this area, the current decline may just be a correction phase in a longer uptrend.
Notable support zones are currently at 4,283 USD and 4,225 USD/ounce. Meanwhile, above are resistance zones of 4,534 USD, 4,632 USD and 4,696 USD/ounce. Further, the 4,769–4,774 USD/ounce zone is considered an important barrier to a stronger and more sustainable upward momentum.
The fact that gold prices regained the 4,400 USD/ounce mark is therefore of noteable psychological significance. If maintained above this zone, buying power may continue to be strengthened and the market's attention can be directed towards the 4,534 USD/ounce resistance zone.
Conversely, if gold once again loses 4,400 USD and passes through 4,283 USD, selling pressure may increase. At that time, the 4,225 USD mark will become an important test for the short-term trend.
Weakening USD supports gold prices
Another factor creating support for the precious metal is the weakening trend of the USD. WGC said that the Bloomberg Dollar Index continues to be below the 55-day and 200-day averages, while maintaining a weak technical state.
The weakening USD often creates favorable conditions for gold as the precious metal becomes more attractive to investors holding other currencies. In this context, the downward pressure of the greenback may help limit gold's correction momentum and create room for the precious metal to recover.
In general, the return of gold prices above 4,400 USD/ounce shows that buying power is appearing after a strong correction. WGC still sees the current period as a pause in the longer uptrend, rather than a clear signal that the uptrend has ended. However, maintaining the support zone of 4,225 USD/ounce is still decisive.
In the short term, 4,225 USD/ounce is an important support point below, while 4,534 USD/ounce is the gold milestone to be overcome to strengthen the recovery momentum. If this resistance zone is overcome, the market may head towards the levels of 4,632 USD and 4,696 USD/ounce.
