Gold rebounded sharply this week, riding on hopes that US government shutdown may be nearing its end. It may sound odd but gold is behaving more like an 'alpha' proxy outperforming traditional risk assets. XAU last seen at 4134.79 levels, OCBC's FX analysts Frances Cheung and Christopher Wong note.

Bearish momentum on daily chart shows signs of fading

"Improved technical setup and momentum may also have played a part. Sharp corrective pullback helped to restore healthier positioning and valuations. The medium-term drivers that underpin gold's constructive bias remain intact - Fed to continue to ease policy into 2026 with rates likely to trend lower overall, and central-bank as well as institutional diversification demand continues."

"Gold’s role as a portfolio hedge against fiscal and policy uncertainty, store of value and a confidence hedge remain intact. To add, we earlier did flag that if gold manages to consolidate in this range of 3,920 – 4,020, then it may set the stage for base-building before the next leg higher."

"Bearish momentum on daily chart shows signs of fading while RSI rose. Next resistance at 4250 levels. Support at 4064 (21 DMA), 3970 (38.2% fibo)."