- Gold price resumes its uptrend as the US Dollar comes under fresh selling pressure.
- US Treasury bond yields extend retreat ahead of a fresh batch of United States data.
- Gold price remains poised to test 1,830 as a ‘Santa rally’ kicks in finally.
Gold price is catching a fresh bid and heading back for a retest of the multi-month high at $1,825, as bulls regain the strength on Thursday. The United States Dollar (USD) has reversed the previous rebound and resumed its downtrend amid an extended risk rally seen on global stocks.
US Dollar at the mercy of a ‘Santa rally’ and United States data
The renewed US Dollar weakness has helped Gold price find a fresh impetus to attempt another run northward. Investors are cheering the ‘Santa rally’ that finally came through, as the Wall Street indices closed nearly 1.50% higher on Wednesday. The US Dollar resumes its bearish momentum after staging a brief comeback a day ago, drawing support from the upbeat United States economic data. The United States Conference Board Consumer Confidence rose to an eight-month high in December, as the inflation expectations fell to 6.7%. Markets shrugged off a 7.7 slump in the United States Existing Home Sales Change data alongside the disappointing headline Existing Home Sales figure.
Attention now turns toward a fresh batch of United States economic releases, including the Q3 Final Gross Domestic Product (GDP), weekly Jobless Claims and the Q3 Personal Consumption Expenditures Prices report. Traders could ignore economic data from the United States if the risk rally on Wall Street gathers steam this Thursday. The safe-haven US Dollar will remain at the mercy of the risk trend, eventually impacting the USD-sensitive Gold price.
Focus on United States Treasury bond yields
With the global bond markets stabilizing after the surprise move by the Bank of Japan (BoJ), the Treasury bond yields from the United States are extending their retreat from multi-week highs, allowing Gold price some comfort. The benchmark 10-year United States Treasury bond yields are losing 0.70% on the day, trading at 3.65%, as of writing. In an unexpected move, the Bank of Japan tweaked its Yield Curve Control (YCC) policy to allow the yield on the 10-year Japanese government bond to move 50 basis points on either side of its 0% target.
The pre-Christmas holiday mood is also setting in, with liquidity thinning, which could also offer a helping hand to Gold buyers. Gold price’s technical setup on the daily chart also remains in favor of the optimists.
Gold price technical analysis: Daily chart
Nothing seems to have changed from a technical perspective, as Gold price still yearns for acceptance above the horizontal trendline resistance at $1,825.
Daily closing above the latter will yield a big breakout, opening doors toward the $1,850 psychological level. Ahead of that the $1,830 round figure will challenge the bearish commitments.
The bullish 14-day Relative Strength Index (RSI) and a bull cross confirmation lend support to the bullish outlook in Gold price.
The bullish 21-Daily Moving Average (DMA) at $1,785 has pierced the horizontal 200DMA for the upside, awaiting a confirmation on a daily closing basis.
Alternatively, a rejection at the $1,825 resistance could recall sellers toward the critical confluence support at $1,785.
On its way downwards, Gold price could battie the December 14 high of $1,814, below which a sharp drop to the $1,800 mark cannot be ruled out.
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