It has been a rather textbook rebound for gold, if you go by the technicals at least. The drop below the $2,000 mark last week was arrested by the 100-day moving average (red line) as buyers held their ground. Since then, we are seeing a modest push higher back to $2,020 now and it looks like it could extend for a bit more.
Of course, much of it still depends on dollar sentiment and the mood in the bond market. However, at least the technical signs are encouraging in the short-term.
That being said, the bigger picture looks to be pointing towards a pattern of lower highs and lower lows for gold. That poses a bit of a concern, especially if the latest rebound fizzles before testing the 1 February high of $2,065.
If so, the onus will be on buyers again to show up in defending any downside push back towards the 100-day moving average.
The good news for gold now at least is that the dollar isn't running hot against the rest of the major currencies bloc. The greenback's latest run higher has been capped and that could translate to a reversal, depending on the next set of big data points.
Adding to that is 10-year Treasury yields also being limited closer to its own 100-day moving average at 4.33%. Those are providing some tailwind for gold to keep up the advance for now. But as mentioned above, the technical outlook in the bigger picture does present a cautious signal.
