Gold benefits from weaker dollar, on track for the biggest weekly gains in over two years

Gold keeps firm bullish tone on Friday and extends strong rally from $1616 (Nov 3) low, trading at the highest levels since mid-August.

The yellow metal’s price accelerated sharply higher on talks that the Fed may ease its hawkish policy, with the notion being boosted by US CPI data which showed that inflation cooled further in

October, adding to hopes that the US central bank could start tempering its aggressive stance in raising interest rates.

Fresh weakness of the dollar also contributed in boosting gold’s appeal.

Daily chart studies are bullish but overbought, suggesting that bulls may pause for consolidation, with limited dips, as gold is on track to end the second week in green and also for the biggest weekly advance in over 2 years.

This adds to the bullish signals on formation of reversal pattern on weekly chart.

Bulls need to clear key barriers at $1789/$/$1803 zone (Fibo 38.2% of $2070/$1616 / psychological / 200DMA) to confirm reversal signal and open way for stronger recovery.

Today’s low offers initial support at $1747, followed by former top at $1729 (Oct 4) and broken Fibo 23.6%  ($1722).

Res: 1756; 1782; 1788; 1800
Sup: 1747; 1729; 1722; 1711