Gold: Dovish ECB to provide additional upside

Gold (XAU/USD) closed higher for the second straight day on Wednesday, having staged a solid $30 bounce intraday. Bullish Doji reversal points to more gains but European Central Bank (ECB) could be a risk, FXStreet’s Dhwani Mehta reports.

Key quotes

“All eyes remain on the ECB monetary policy decision due later on Thursday amid increased dovish expectations, which could benefit the yieldless gold. The central bank is likely to stand pat on its policy, although could leave doors open for stimulus expansion in its December meeting amid negative inflation and concerns over the euro strength. A dovish ECB outcome could bode well for the equities and exacerbate the pain in the dollar, in turn, rendering gold-supportive.”

“The bulls remain hopeful, although acceptance above the falling trendline (symmetrical triangle) resistance at $1958 is needed to extend the bullish reversal. A break above the last could open doors towards Sept 2 high of $1973.34.”

“Meanwhile, the bullish bias will likely remain intact so long as the price holds above the robust cap around $1916-$1910, where the upward-sloping 50-DMA and rising trendline support coincide.”

“The 14-day Relative Strength Index (RSI) trades flat but holds above the midline, supporting the case for the further upside.”