Gold trading showed a modest recovery in price yesterday Wednesday after a disappointing opening early in the week.
The US dollar's retracement yesterday has opened some room for gold to 'breathe' again, but the uncertain market atmosphere at the end of November remains to make investors cautious of the risk of further price declines.
Prices showed a positive increase in the Asian session yesterday, but moving to the New York session, the price retreated again.
This can be seen on the XAU/USD chart which measures the value of gold against the US dollar.
Last Monday, investors were surprised by a significant drop in gold prices from a height of 2720.00 approaching the 2600.00 level.
This is in contrast to the pattern shown last week when gold prices managed to maintain their rise throughout the week.
Then the price leveled off on Tuesday before there was an increase shown in the Asian session yesterday reaching a level of around 2657.00 in the European session.
The price fell again in the following session and hovered around 2630.00 in trading that resumed early today (Thursday).
If the price still tries to make an increase, the 2650.00 to 2670.00 zone will be a resistance that needs to be broken as tested yesterday.
If successful, a higher rise is expected to regain the height of the beginning of the week when the price began to plunge.
However, if it drops lower, 2600.00 is seen as an important support that will be tested by the price that still limits the price fall.
If the price plunges below this important zone, investors should prepare for a more severe fall in gold towards 2540.00 again, the level reached in mid-November.
