Gold rebounds back to $2,000 as XAU/USD follows S&P 500

• Gold upside bias remains intact as it rebounds approaching daily highs.
• S&P 500 hit a record high and then pulled back, XAU/USD followed.

Volatility around gold prices remains elevated. After the beginning of the American session, XAU/USD jumped to $2,016/oz reaching the highest level since August 10 and then pulled back sharply and bottomed at $1,975 before bouncing back above $2,000.

As of writing, gold is hovering around $2,005, up $25 for the day, about to post the fourth gain out of the last five days. From the last week low, gold has risen $150.

Over the last hours, XAU/USD has been moving highly correlated with equity prices. The S&P 500 and XAU/USD corrected lower from record highs and one-week highs respectively, bottomed and rebounded at the same time. The S&P is up 0.15% and gold gains 0.75%.

The correction in gold to $1,975 took place also when the greenback trimmed losses across the board. Still, the greenback remains under pressure, giving some support to the move to the upside in gold. The DXY is falling 0.55%, trading around 92.30, about to post the lowest close in two years.

Levels to watch

On the upside, resistance levels in gold are seen at $2,020, $2,035 and $2,050 (last week high). On the flip side, the area around $1,990 might be seen as the immediate support followed by $1,975 (Aug 18 low) and $1,958.