Gold Price Analysis: XAU/USD drops back below $1700 amid surging Treasury yields
- XAU/USD’s recovery stalls, faces rejection at 21-SMA on the 4H chart.
- RSI has turned south, pointing to more downside in the near-term.
- The US Treasury yields resume their rally, driving US dollar higher.
Gold (XAU/USD) fails to find acceptance at higher levels, as the ongoing rally in the US Treasury yields continues to underpin the US dollar, capping the upside attempts.
The resumption in the Treasury yields rally comes on the heels of a stronger US NFP report and Senate’s passage of the $1.9 trillion stimulus bill, which boosted the reflation theme.
Amid a data-light US docket, gold traders will continue to take cue from the bond markets and action in the yields for fresh trading impetus.
From a technical perspective, sellers seemed to have returned following a rejection near the downward-sloping 21-simple moving average (SMA), now at $1709.
Gold Price Chart: Four-hour
The XAU bears look to test the falling trendline support at $1679, as the Relative Strength Index (RSI) has also turned south, suggesting more room to the downside.
Ahead of that level, the nine-month lows of $1687 could be tested.
Alternatively, a sustained move above the 21-SMA hurdle could trigger a run towards the bearish 50-SMA at $1736.
Note that the price wavers within a falling wedge formation, with acceptance above the latter could validate the pattern. The near-term bearish bias could negate thereafter.
At the press time, gold trades modestly flat at $1698.80, near-daily lows.
Gold Additional levels
Author
Dhwani Mehta
FXStreet
Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.
