XAU/USD Current price: $1,817.09
- The greenback remains on the back foot despite the market’s sentiment improving.
- US government bond yields are sharply higher on an otherwise quiet Monday.
- XAU/USD is poised to extend its advance in the near term towards the 1,825/30 price zone.
Gold is up on Monday amid the broad dollar’s weakness, trading at around $1,817 a troy ounce. The dollar maintains the sour tone despite the upbeat employment report released on Friday, as speculative interest is still digesting the latest hawkish announcements from European central banks. The ECB and the BOE surprised investors after disclosing their latest decisions, which follow the US Federal Reserve’s path of tighter and faster movements to tame inflation.
The week started with stocks struggling to post gains. Most European indexes managed to close in the green, providing mild support to Wall Street. The absence of directional strength, however, is notable as market participants await an update on US inflation.
Meanwhile, US government bond yields are on the rise. The 10-year Treasury note yields 1.93% at the time being, while that on the 2-year note currently stands at 1.30%. Usually a bullish catalyst for the greenback, higher yields are barely enough to prevent it from falling further.
Gold price short-term technical outlook
The XAU/USD pair has traded as high as $1,818.44 a troy ounce, a few cents above the 50% retracement of the latest daily slump, now battling around the level. The daily chart shows that the risk is skewed to the upside, although the bullish potential is limited, as the pair holds above directionless 100 and 200 SMAs but below a flat 20 SMA. Technical indicators, in the meantime, advance within neutral levels.
The 4-hour chart favors another leg north, as the metal develops above a bullish 20 SMA, while technical indicators aim higher within positive levels. Still, a bearish 100 SMA reinforces the resistance area around the daily high, a few cents above the mentioned intraday low. The metal has room to extend its gains up to 1,825.60, the 61.8% retracement of its latest daily slide.
Support levels: 1,808.10 1,797.45 1,787.50
Resistance levels: 1.818.50 1,825.60 1,831.70
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