Gold Price Forecast: XAU/USD breaks above downtrend resistance, building on lower yields, levels
- Gold has been riding as US Treasury yields are retreating.
- XAU/USD is on course to break above the downtrend resistance line.
- Momentum on the four-hour chart has turned positive, providing another oomph to bulls.
- Gold Weekly Forecast: XAU/USD snaps three-week winning streak, looks to test $1,760
Sell in May and go away? The adage about stock markets seems irrelevant to gold – at least not on the first day of May 2021. XAU/USD has been staging a substantial move higher, climbing from the bottom of $1,765 to $1,790.50 at the time of writing.
The precious metal – which has no yield – remains highly correlated with returns on US Treasuries. The benchmark 10-year bond yield has dropped to 1.62%, dragging the dollar with it and boosting gold. Markets are content with the Federal Reserve's dovish approach and the ongoing printing of dollars is a bullish factor for XAU/USD.
Nonfarm Payroll figures for April will likely be the main mover for markets, and nervous moves toward that event are set to trigger high volatility.
Gold Technical Analysis
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Gold is benefitting from upside momentum on the four-hour chart, while the Relative Strength Index (RSI) is still below 70. XAU/USD bounced off the 100 Simple Moving Average (SMA) and pierced the 50 SMA on its way up. Another milestone is the move above $1,789 that was a sing high earlier on.
The next critical level to watch is $1,797, which held the yellow metal down in late April. It serves as the last nation before the all-important psychological barrier of $1,800.
Support awaits at $1,769, which was a swing low last week, followed by the late April trough of $1,756.
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Author
Yohay Elam
FXStreet
Yohay is in Forex since 2008 when he founded Forex Crunch, a blog crafted in his free time that turned into a fully-fledged currency website later sold to Finixio.
