Gold Price Analysis: XAU/USD eyes $1736 amid inverse head and shoulders breakout

Gold bulls extend control in the European session.
US-China woes over the Hong Kong issue fuels the upside.
Technical set up has turned in favor of the bulls in the near-term.

Dhwani Mehta FXStreet

Gold prices (XAU/USD) snap three-day losing streak and rebound sharply on Thursday, mainly driven by the increased flight to safety buying, as the US-China tensions spike up over the Hong Kong security issue.

Investors fret over a likely Trump administration’s response to Beijing’s forceful act on Hong Kong, which could revive the trade war between both the economies.

Alongside the bullish fundamental factors, the short-term technical set up has also turned in favor of the XAU bulls, which is likely to translate into further gains for the yellow metal.

The price has confirmed an inverse head and shoulders breakout on the 15-minutes chart, following a convincing break above the pattern neckline located at 1715.40.

Subsequently, the buying pressure intensified, driving the rates to hit a fresh two-day high at 1721.66 before reversing slightly to around 1720 levels, where it now wavers.

The upside break towards the pattern target of 1736.53 is also backed by the bulls’ conviction, especially after the spot breached the bearish 200-bar Simple Moving Average (SMA) from below. En route the pattern target, gold may encounter stiff resistance at 1730 (round number).

Should the bulls face exhaustion, the price could pull back towards the upward sloping 21-bar SMA at 1716.21, below which the pattern neckline will get tested.

All in all, the upside bias appears more compelling, with the Relative Strength Index (RSI) probing the overbought territory near the 65.50 region.

Gold: 15-minutes chart

Gold: Additional levels to watch

XAU/USD

Overview
Today last price	1720.07
Today Daily Change	10.63
Today Daily Change %	0.62
Today daily open	1709.44

Trends
Daily SMA20	1716.24
Daily SMA50	1674.94
Daily SMA100	1631.03
Daily SMA200	1562.84

Levels
Previous Daily High	1716.13
Previous Daily Low	1693.78
Previous Weekly High	1765.38
Previous Weekly Low	1717.34
Previous Monthly High	1747.82
Previous Monthly Low	1568.46
Daily Fibonacci 38.2%	1702.32
Daily Fibonacci 61.8%	1707.59
Daily Pivot Point S1	1696.77
Daily Pivot Point S2	1684.1
Daily Pivot Point S3	1674.42
Daily Pivot Point R1	1719.12
Daily Pivot Point R2	1728.8
Daily Pivot Point R3	1741.47

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.

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