Gold Price Forecast: XAU/EUR retests $1,600 as bulls continue to defend 21-DMA

• XAU/EUR looks to extend the recent rebound from two-week lows.
• Gold buyers remain hopeful while above the 21-DMA.
• RSI sits above the midline, supporting the recovery mode in gold.

XAU/EUR is looking to build onto the recovery from two-week lows of $1,582 reached earlier this week.

The spot is currently flirting with the $1,600 threshold despite a minor pullback in the euro, as markets reassess the potential risks emerging out of the European covid curbs.

Looking at it technically, XAU/EUR stalled its four-day losing streak on Wednesday, having found strong support at the ascending 21-Daily Moving Average (DMA), now at $1,592.

A daily closing below the latter is needed to resume the correction from the 14-month top at 1,653.90.

The two-week lows will be retested below the 21-DMA support, opening floors for a drop towards $1,575, November 10 lows.

If the selling momentum accelerates, then the bears will target the upward-sloping 50-DMA at $1,550.

XAU/EUR daily chart

On the upside, Wednesday’s high at $1,612 will offer immediate resistance, above which the $1,650 psychological will draw buyers’ attention.

The 14-day Relative Strength Index (RSI) sits above the midline, suggesting that there is scope for the rebound to gain traction.

Acceptance above $1,650 could trigger a fresh upswing towards the $1,700 threshold.