Gold Price Analysis: XAU/USD bulls to defy overbought conditions on a break above $1,880

Gold (XAU/USD) strengthened its bullish streak and hit fresh three-month highs just shy of the $1870 mark on Monday, as the sell-off in the US dollar alongside the Treasury yields continue to bolster gold’s appeal. Looking ahead, the yellow metal will continue to take cues from the US dollar price action amid a lack of significant US economic data release. What’s more, overbought conditions on gold’s 4H chart warrant caution for the bulls, FXStreet’s Dhwani Mehta briefs.

XAU/USD risks a pullback amid overbought conditions

“The Fedspeak will be closely followed ahead of Wednesday’s FOMC minutes. The FOMC minutes this week hold the key for gold’s next moves.”

“The Relative Strength Index (RSI) has moved into the overbought territory, suggesting that the gold price could see a pullback before it resumes the uptrend. Therefore, an immediate cap is seen at the $1850 psychological level. The pattern resistance now support at $1844 could be tested if the pullback picks up pace. The bullish 21-simple moving average (SMA) also coincides at the level.”

“The gold bulls need to crack the $1880 target on a sustained basis, in order to extend their journey towards the $1900 threshold.”