Gold Price Forecast: XAU/USD rallies beyond $4,100 on risk-off trading

• Gold extends gains beyond $4,100 after bouncing from the $4,000 area.
• Risk aversion and weak US employment figures have given a fresh push to precious metals.
• XAU/USD's strong recovery suggests that the bearish correction from $4,245 might be completed.

Gold (XAU/USD) is trading higher for the second consecutive day on Wednesday, reaching intra-week highs, right above $4,100, favoured by the risk-averse markets and heightened hopes that the US Federal Reserve might ease monetary policy at its December meeting.

US employment data disappointed on Tuesday, with Initial Jobless Claims growing and the ADP Weekly Employment Change showing that businesses kept laying off workers in the four weeks to November 1. These figures add pressure on the Federal Reserve to cut interest rates further, although the market is likely to wait for Thursday's Nonfarm payrolls figures to confirm those views.

Technical Analysis: Potential trend shift for Gold

Gold has bounced from the 78.6% Fibonacci retracement of the early November rally, near $4,000, and is now eroding resistance at $4,105 (November 17 high). The 4-Hour Relative Strength Index (RSI) has bounced up from the 50 level, and the Moving Average Convergence Divergence is about to cross above the signal line, which suggests that the correction from $4,145 highs might have completed.

To the upside, if the pair manages to hold above the $4,100 area, bulls might gain confidence to test a previous support level at $4.150 (November 13 low) ahead of the November 14 high, at $4,210, and the monthly high, at the mentioned $4,245 level.

A bearish reaction from current levels, on the contrary, is likely to be challenged at the session lows of $4,055 ahead of Tuesday's low, at the $4,000 level. Further down, the November 4 low, in the area of $3,930, would come into focus.