Spot gold is edging higher Wednesday after rebounding from an early session setback. The main trend changed to down earlier today when sellers took out the swing bottom at $4,311.04, but new buyers may have emerged on the test of a key retracement zone.

The long-term range is $3,942.10 to $4,697.11. Its 50% to 61.8% retracement zone is $4,319.60 to $4,230.51. Today’s rebound came from a trade to $4,282.62, which fell inside the zone. To some traders, this is a value zone.

Adding to concerns about heightened volatility is the fact that Spot gold is trading under 200-day moving average resistance at $4,530.71 and nearing 50-day moving average support at $4,222.93.

The early price action suggests trader reaction to the 50% level at $4,319.60 will determine the direction of the market into the close. A sustained move over this level could lead to a strong rally into the close, while failure to hold it would put the $4,230.51 to $4,222.93 support cluster back on the radar.

What to Watch

The rate trade stays pointed against gold until the data changes it. Warsh and Barr both said this week the Fed has more work to do. The 10-year pulled back from 4.814% but is still near a multiyear high. The dollar index is at 99.67. Crude is above $90 WTI and near $95 Brent. The geopolitical bid from the Middle East conflict is going to the dollar, not the metal. Friday’s payrolls report at 56,000 expected is the number that can either keep the 68% September odds in place or force a repricing. The rate pressure holds until a soft jobs number gives buyers a reason to step back in.

Gold bounced from $4,282.62 inside the long-term retracement zone at $4,319.60 to $4,230.51. The main trend turned down Wednesday when sellers took out $4,311.04. The 200-day moving average at $4,530.71 is resistance above. The trade stays bearish while gold sits under $4,319.60. A close above that level is the first sign value buyers are taking over. A break through the 50-day at $4,222.93 opens the support cluster down to $3,942.10. The 200-day break from Friday is still the damage running this market. Wednesday’s bounce has not undone it.

If you’d like to know more about how to trade gold, please visit our educational area.