• 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.

Feed news Join Telegram

Recommended Content

Recommended Content

Editors’ Picks

EUR/USD extends slide toward mid-1.0200s after US data

EUR/USD extends slide toward mid-1.0200s after US data

EUR/USD continues to decline toward 1.0250 during the American trading hours on Friday. After the data published by the UOM showed that the long-run inflation outlook rose to 3% in August from 2.9% in July, the dollar gathered strength against its rivals, weighing on the pair.


GBP/USD pushes lower 1.2100 on broad dollar strength

GBP/USD pushes lower 1.2100 on broad dollar strength

GBP/USD is trading deep in negative territory near 1.2100 during the American session on Friday. With the UoM's Consumer Sentiment Survey pointing to a modest increase in the long-run inflation outlook, the US Dollar Index extended its rally, reflecting a broad dollar strength.


Gold clings to modest gains above $1,790

Gold clings to modest gains above $1,790

Gold stays relatively resilient on Friday and trades modestly higher on the day above $1,790. Although the greenback continues to outperform its rivals on the latest US data, falling US Treasury bond yields help XAU/USD hold in positive territory.

Gold News

Shiba Inu ready to go ballistic: Shiba Eternity released in Vietnam

Shiba Inu ready to go ballistic: Shiba Eternity released in Vietnam

Shytoshi Kusama, the project leader of Shiba Inu announced the launch of Shiba Eternity for Vietnamese players. The game is available for testing and the team has asked users for their review. 

Read more

FXStreet Premium users exceed expectations

FXStreet Premium users exceed expectations

Tap into our 20 years Forex trading experience and get ahead of the markets. Maximize our actionable content, be part of our community, and chat with our experts. Join FXStreet Premium today!