Gold Price Analysis: XAU/USD climbs back above $1740 level, upside seems limited


  • Gold managed to gain some positive traction on Friday and erased the overnight losses.
  • Retreating US bond yields kept the USD bulls on the defensive and extended some support.
  • Bearish technical set-up warrants caution before positioning for any meaningful upside.

Gold edged higher in the last hour and refreshed daily tops, around the $1743-44 region heading into the European session.

Following an early dip to levels just below the $1730 level, the precious metal managed to regain some positive traction and has now recovered the previous day's modest losses. The prevalent cautious mood around the equity markets was seen as one of the key factors that extended some support to the safe-haven XAU/USD.

The overnight sell-off in the US fixed income market and a slump in crude oil prices took their toll on the global risk sentiment. This, in turn, forced investors to take refuge in traditional safe-haven assets, including gold. Apart from this, a subdued US dollar demand further benefitted the dollar-denominated commodity.

The USD bulls moved on the sidelines amid a modest pullback in the US Treasury bond yields, which provided an additional boost to the non-yielding yellow metal. That said, the optimistic outlook for the US economy might continue to underpin the greenback and keep a lid on any meaningful upside for the XAU/USD.

The Fed added to the narrative of a relatively faster US economic recovery and predicted a V-shaped recovery this year. Moreover, policymakers did not show any discomfort from the recent surge in long-term borrowing cost. This should act as a tailwind for the US bond yields and continue lending some support to the USD.

Even from a technical perspective, repeated failures near the $1760-65 horizontal support breakpoint, now turned resistance warrants caution before positioning for any further appreciating move. Hence, any subsequent positive move might still be seen as a selling opportunity and runs the risk of fizzling out rather quickly.

Technical levels to watch

XAU/USD

Overview
Today last price 1740.47
Today Daily Change 3.60
Today Daily Change % 0.21
Today daily open 1736.87
 
Trends
Daily SMA20 1738.81
Daily SMA50 1796.04
Daily SMA100 1832.8
Daily SMA200 1860.47
 
Levels
Previous Daily High 1755.59
Previous Daily Low 1719.3
Previous Weekly High 1739.93
Previous Weekly Low 1676.87
Previous Monthly High 1871.9
Previous Monthly Low 1717.24
Daily Fibonacci 38.2% 1733.16
Daily Fibonacci 61.8% 1741.73
Daily Pivot Point S1 1718.92
Daily Pivot Point S2 1700.96
Daily Pivot Point S3 1682.63
Daily Pivot Point R1 1755.21
Daily Pivot Point R2 1773.54
Daily Pivot Point R3 1791.5

 

 

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