- Gold set to extend the bounce, eyes critical $1860 barrier.
- US stimulus hopes, fresh China-HK news underpin gold.
- Hourly chart points to a potential pennant breakout.
- Eyes on stimulus, covid updates alongside T-yields price action.
Gold (XAU/USD) staged an impressive bounce from six-week lows of $1817 on Monday, as the US dollar came off the highs after stocks tumbled and drove the Treasury yields lower Renewed coronavirus concerns weighed on the market mood and prompted a retreat in the US yields. Further, markets weighed in the prospects of a multi-trillion-dollar stimulus package due from President-elect Joe Biden this Thursday, which implies higher inflation, benefiting gold as a hedge against inflation. The metal settled Monday around $1845, losing marginally on the day.
Heading into Tuesday, gold has snapped the four-day losing streak, posting small gains to trade once again above $1850, as of writing. A pause in the US dollar rally combined with US stimulus expectations bodes well for the XAU bulls. Dismal market mood, amid mounting covid fears and fresh China-Hong Kong tussle, also favors the upside in the safe-haven gold. The latest Reuters report cited that China is planning a further Hong Kong crackdown after more than 50 democrats in HK were arrested last week.
In absence of relevant economic news, the broader market sentiment and Treasury yields price action could influence the flows in yieldless gold.
Gold Price Chart - Technical outlook
Gold: Hourly chart
The hourly chart shows that gold has broken through the pennant resistance at $1851.48, although a closing on the stick is required to validate the pattern breakout.
The bulls are probing the bearish 50-hourly moving average (HMA) at $1858, with the Relative Strength Index (RSI) having recaptured the midline, currently looking north at 58.07.
The next relevant upside barrier awaits at $1890, the downward-sloping 100-HMA.
If the bulls face rejection at 50-HMA, a pullback towards the pattern resistance now support around $1852 cannot be ruled out. Further south, the horizontal 21-HMA at $1847 could offer some support, below which the pattern support at $1842 would come into play.
Meanwhile, Monday’s low of $1817 will be the level to beat for the bears.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
USD/JPY pops and drops on BoJ's expected hold
USD/JPY reverses a knee-jerk spike to 142.80 and returns to the red below 142.50 after the Bank of Japan announced on Friday that it maintained the short-term rate target in the range of 0.15%-0.25%, as widely expected. Governor Ueda's press conference is next in focus.
AUD/USD bears attack 0.6800 amid PBOC's status-quo, cautious mood
AUD/USD attacks 0.6800 in Friday's Asian trading, extending its gradual retreat after the PBOC unexpectedly left mortgage lending rates unchanged in September. A cautious market mood also adds to the weight on the Aussie. Fedspeak eyed.
Gold consolidates near record high, bullish potential seems intact
Gold price regained positive traction on Thursday and rallied back closer to the all-time peak touched the previous day in reaction to the Federal Reserve's decision to start the policy easing cycle with an oversized rate cut.
Ethereum rallies over 6% following decision to split Pectra upgrade into two phases
In its Consensus Layer Call on Thursday, Ethereum developers decided to split the upcoming Pectra upgrade into two batches. The decision follows concerns about potential risks in shipping the previously approved series of Ethereum improvement proposals.
Bank of Japan set to keep rates on hold after July’s hike shocked markets
The Bank of Japan is expected to keep its short-term interest rate target between 0.15% and 0.25% on Friday, following the conclusion of its two-day monetary policy review. The decision is set to be announced during the early Asian session.
Moneta Markets review 2024: All you need to know
VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.