Gold eases from weekly highs, holds above $1200

• Gold trimmed gains as US dollar recovers but held above $1200.
• XAU/USD heads for the highest close since September 20.

Gold prices jumped at the beginning of the US session from $1,190/oz to $1,208.10 reaching the highest level since September. Afterward pulled back finding support above $1,200. Near the end of the session was hovering around $1,202, up more than $10, the biggest daily gain in more than a month.

XAU/USD was about to post the highest close in more than a week despite the fact that the US dollar rose. Technical factors and some profit taking might have contributed to the rally in gold that rose $16 in three hours during the day before pulling back modestly.

Technical outlook

“The intraday bullish momentum sent spot price back to the range that dominated it since late August, but further gains are not yet clear, according to technical readings in the daily chart, as the pair keeps developing below strongly bearish 100 and 200 DMA while settling above a flat 20 DMA”, said Valeria Bednarik, Chief Analyst at FXStreet.

According to her, the 4 hours chart, shows that the metal could extend its advance, as it broke with a strong volume candle above all of its moving averages, while the Momentum indicator heads sharply higher and the RSI barely retreated from overbought readings. Bednarik point out that a break above Tuesday’s high could favor an extension to $1,214.20.