Gold extends rally above $1200, heads for highest since late August

  • A weaker US Dollar and an improvement in risk appetite boosted gold prices. 
  • The yellow metal broke decisively above $1200 and points to further gains from a technical perspective. 

Gold prices rose further during the US session as the US dollar consolidates losses against commodity and emerging market currencies. The ounce printed a fresh 2-week high at $1,208.30 and then pulled back modestly. 

Near the end of the session was hovering around $1,207, holding to a daily gain of almost $7 and headed toward the highest close since August 27. The move higher came from a slide of the greenback on the back of potential new negotiations between the US and China and also amid an improvement in risk appetite overall. Also, a negative reading in the US PPI affected the greenback. On Thursday, CPI data is due. 

XAU/USD Technical outlook 

“Daily chart shows that the price broke the upper end of the daily descendant channel that led the way since mid-August, while the price also moved well above its 20 DMA for the first time this week. In the mentioned chart, the Momentum indicator is barely recovering within negative levels, but the RSI gained upward traction, heading higher almost vertically now at 55, supporting additional gains ahead”, says Valeria Bednarik, Chief Analyst at FXStreet. 

According to her in the short-term the outlook is also bullish after it broke above all of its moving averages extending gains beyond them for the first time since mid-June and as technical indicators head firmly higher within positive levels.

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