XAUUSD – Gold Is Grinding Along the Broken Descending Channel. Is a Bigger Recovery Coming?

 

November 6, 2026 | Daily Technical Analysis & Fundamental Outlook

I have been watching gold's price action quite closely, and there is something interesting happening on the daily chart. The descending channel was actually broken several weeks ago, so this is not a fresh breakout. What followed was a strong recovery towards the $4,650–$4,700 area, but instead of continuing higher, gold entered a prolonged correction.

What I find particularly interesting now is how price has been moving along the upper boundary of the former descending channel. Rather than falling back into the old structure, gold has been spending considerable time around this former resistance area.

For me, this is an important distinction. The breakout has already happened, but the market has not yet delivered the strong bullish continuation that many traders might have expected. We are now watching whether the former channel boundary can develop into lasting support.

I am not ready to call this a confirmed bullish reversal, but I certainly do not want to ignore the possibility that gold is building a base for another attempt higher.

Technical Analysis – The Former Channel Boundary Is the Key

Looking at the daily chart, the dominant descending channel is still clearly visible. However, price broke above its upper boundary several weeks ago and has remained outside the original structure.

Since then, the market has gradually moved lower, but the character of this decline is worth watching. Gold has been almost crawling along the former upper trendline, repeatedly approaching or testing this area rather than decisively falling back into the channel.

This could be a sign that the market is trying to establish a new support structure.

The next important factor is the daily 200 SMA, currently around $4,524. Gold remains considerably below this moving average, which means that the longer-term technical picture still needs substantial improvement.

I would particularly like to see buyers regain momentum and push price towards the $4,400–$4,500 region. A recovery towards the 200 SMA would be an important next step, although reaching it would not automatically mean that the broader trend has turned bullish.

The levels I am watching on my chart:

• $4,000–$4,100: Nearby demand area and an important zone for buyers to defend.

• $4,250–$4,300: Intermediate resistance during a potential recovery.

• $4,400–$4,525: An important recovery area, including the daily 200 SMA.

• $4,600–$4,700: Major overhead resistance from the previous rally.

• $4,800–$4,900: A broader supply area from the earlier price structure.

On the downside, losing the recent support around $4,000 would make me considerably more cautious and could open the door to another test of the recent lows around $3,870–$3,900.

The Important Question – Support or Another Failed Breakout?

This is probably the most interesting part of the current chart.

A former resistance level becoming support is one of the more useful concepts in technical analysis. However, I would like to see more than just price hovering around a trendline.

Ideally, gold would establish a higher low, maintain its position above the former channel boundary and then break through the nearest resistance levels.

That would give us a much stronger indication that buyers are gradually regaining control.

On the other hand, if price loses this area and starts trading convincingly back inside the old channel, the bullish breakout would become much less convincing.

For now, I think patience is important. The market is giving us an interesting structure, but the confirmation still needs to come from price action.

Fundamentals – A Complicated Environment for Gold

The fundamental picture is not entirely straightforward either.

Gold has recently benefited from a weaker US dollar and lower Treasury yields following the US midterm election results. The possibility of a change in Washington's political direction and a potential diplomatic solution to the conflict with Iran helped improve market sentiment.

However, the latest developments also show how quickly this picture can change.

On Friday, November 6, gold came under renewed pressure as oil prices rebounded, bringing inflation concerns back into focus. Higher energy prices can make the Federal Reserve more cautious about easing monetary policy, which is generally negative for non-yielding assets such as gold.

Reuters reported that spot gold was down approximately 1.1% to $4,044.09 per ounce during early Friday trading, while December gold futures were around $4,053.30.

Another important factor is the US labour market. Investors are waiting for the latest non-farm payrolls report, which could influence expectations regarding the Federal Reserve's next decisions.

At the moment, the market is balancing several competing forces:

• A weaker dollar and lower Treasury yields, which can support gold.

• Higher energy prices and renewed inflation concerns, which can put pressure on gold.

• Expectations surrounding the Federal Reserve's December meeting.

• Geopolitical uncertainty and continued demand for safe-haven assets.

Personally, I think this combination explains why gold has been struggling to establish a clear direction despite the earlier recovery.

Central Banks – The Long-Term Bullish Argument Remains

One thing I would not overlook is continued central bank demand.

The latest World Gold Council report, published on November 3, showed that central banks and other official institutions purchased a net 321 tonnes of gold during Q3 2026.

That represents a 42% increase compared with the same quarter last year.

Year-to-date purchases reached 675 tonnes, already 6% above the corresponding period in 2025.

There was also a significant return of investment flows into physically backed gold ETFs. These attracted 211 tonnes during Q3, bringing global holdings to a record 4,256 tonnes.

I find these numbers important because they show that institutional demand has not disappeared despite the recent correction.

At the same time, retail demand has been less convincing. Bar and coin demand declined by 19% year-on-year, while jewellery demand fell by 17%.

This creates an interesting contrast: central banks and institutional investors continue to accumulate gold, while individual buyers appear more cautious at these elevated price levels.

In my opinion, this remains one of the strongest arguments supporting gold over a longer investment horizon.

Source: World Gold Council, Gold Demand Trends Q3 2026.

Market Outlook – What Am I Watching Next?

At this stage, I am more interested in how gold behaves around the former channel boundary than in trying to predict the next big move.

The bullish breakout happened several weeks ago. Since then, price has been consolidating around the broken trendline, while remaining well below the daily 200 SMA.

My preferred scenario would be for buyers to defend the current area, establish a higher low and gradually push gold towards $4,300 and eventually the 200 SMA around $4,524.

A successful move above the 200 SMA would be a much more convincing indication of a broader trend change.

However, I am also keeping the bearish scenario in mind. A decisive move back into the old descending channel would weaken the breakout structure, while a loss of the $4,000 area could expose the recent lows again.

The longer-term fundamentals remain interesting, particularly central bank purchases and institutional investment demand. But in the short term, the dollar, Treasury yields, oil prices and Federal Reserve expectations may continue to dominate price action.

For now, I am watching the former channel boundary very closely. Gold has already made the first step by breaking out of the descending structure. The next challenge is proving that it can actually build something on top of that breakout.