Gold Price Forecast: XAU/USD looks to $1800 amid bullish technical setup

Gold (XAU/USD) broke the recent range trade to the upside on Thursday and rallied hard to reach fresh two-week highs at 1770, benefiting from the relentless selling in the US dollar across the board. Stronger US Retail Sales and Jobless Claims data suggested a faster economic recovery and boosted the riskier assets at the expense of the safe-haven dollar. The US stocks reached fresh record highs amid economic optimism. Meanwhile, the Treasury yields tumbled, in light of the recent dovish comments from Fed Chair Powell, offering additional support to the non-yielding gold.

On Friday, gold bulls have regained poise Friday after a brief corrective pullback to $1760. The geopolitical tensions between the US and Russia, growing covid vaccine concerns and mixed Chinese data underpin the sentiment around the yellow metal while the US dollar fades its recovery attempt. However, the XAU bulls could face an uphill battle amid the renewed strength in the US Treasury yields across the curve, as attention shifts back to the US macro news. The UOM Consumer Sentiment data is due on the cards later on Friday. In the meantime, the gold traders will take cues from the broader market sentiment, dollar price action and yield dynamics.

Gold Price Chart - Technical outlook

Gold: Hourly chart

As observed in gold’s hourly chart, the price is breaking higher from a bull flag formation. An hourly closing above the falling trendline resistance at $1764 will validate the bullish continuation pattern, calling for a fresh rally towards $1800.

Ahead of that level, the February 26 high of $1776 could challenge the optimists.

The Relative Strength Index (RSI) has turned slightly lower but holds well above the midline at 66.57, suggesting that there is a scope for further upside.

On the flip side, the upward-sloping 21-hourly moving average (HMA) at $1761 could act as strong support, below which the daily low could be probed.

Further south, the psychological $1750 barrier could be the level to beat for the XAU bulls.