Gold Price Analysis: XAU/USD clings to gains near weekly tops, around $1860 region


  • Gold edged higher for the second consecutive session amid a softer tone around the USD.
  • Retreating US bond yields undermined the greenback and benefitted the non-yielding metal.
  • The bullish sentiment might keep a lid on any further gains for the safe-haven commodity.

Gold traded with a mild positive bias through the early European session and was last seen hovering near the top end of its weekly trading range, around the $1860 region.

Following the previous day's modest pullback from the vicinity of 50-day SMA, the precious metal managed to regain positive traction and edged higher for the second consecutive session on Wednesday. The uptick was supported by a softer tone surrounding the US dollar, which tends to benefit dollar-denominated commodities, including gold.

The recent strong rally in the US Treasury bond yields started losing steam in reaction to the strong demand seen at a $38 billion 10-year auction overnight and dovish comments from Fed officials. Policymakers toned down talks of tapering the asset purchase program and reiterated that the policy is going to stay supportive.

In fact, the yield on the benchmark 10-year US government bond eased further from the highest level in almost a year and kept the USD bulls on the defensive. That said, expectations of a larger government borrowing could limit the ongoing pullback in the US bond yields and keep a lid on any further gains for the non-yielding yellow metal.

Investors have been pricing in prospects for a more aggressive US fiscal spending following the Democratic sweep in the US Senate runoff elections in Georgia. Apart from this, hopes for a strong global economic recovery remained supportive of the underlying bullish tone and further contributed to cap the upside for the safe-haven XAU/USD.

Hence, any further positive move is more likely to confront a stiff resistance and remain capped near the $1885-90 congestion zone, which coincides with the very important 200-day SMA. A convincing breakthrough, leading to a subsequent strength beyond the $1900 mark will negate the negative bias and pave the way for additional gains.

Market participants now look forward to the US economic docket, highlighting the release of the latest consumer inflation figures. The data, along with the US bond yields, will influence the USD price dynamics. Apart from this, the broader market risk sentiment will also be looked upon for some short-term trading opportunities around the XAU/USD.

Technical levels to watch

XAU/USD

Overview
Today last price 1860.1
Today Daily Change 4.18
Today Daily Change % 0.23
Today daily open 1855.92
 
Trends
Daily SMA20 1885.9
Daily SMA50 1866.92
Daily SMA100 1890.73
Daily SMA200 1841.42
 
Levels
Previous Daily High 1863.83
Previous Daily Low 1836.74
Previous Weekly High 1959.42
Previous Weekly Low 1828.27
Previous Monthly High 1906.87
Previous Monthly Low 1775.52
Daily Fibonacci 38.2% 1853.48
Daily Fibonacci 61.8% 1847.09
Daily Pivot Point S1 1840.5
Daily Pivot Point S2 1825.07
Daily Pivot Point S3 1813.41
Daily Pivot Point R1 1867.59
Daily Pivot Point R2 1879.25
Daily Pivot Point R3 1894.68

 

 

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