Gold Price Analysis: XAU/USD pares early gains, holds above $1,770
- XAU/USD lost its traction after advancing to multi-month highs.
- Near-term support seems to have formed a little below $1,770.
- Gold continues to react to fluctuations in US Treasury bond yields.
The XAU/USD pair managed to build on last week's gains and touched its highest level since late February at $1,790 on Monday. However, the pair failed to preserve its bullish momentum in the second half of the day and reversed its direction. As of writing, XAU/USD was losing 0.13% on a daily basis at $1,774.
In the absence of significant fundamental drivers, the US Treasury bond yields' performance continues to impact gold's valuation. The benchmark 10-year US Treasury bond yield, which spent the first half of the day in the negative territory, was last seen rising nearly 1% on the day.
Gold technical outlook
On the four hour chart, the 38.2% Fibonacci retracement of the rally that started last week on Thursday and ended earlier in the day on Monday seems to have formed strong support at $1,767. Meanwhile, the Relative Strength Index (RSI) indicator on the same chart continues to hold above 50, suggesting that the pair is staging a technical correction. Below $1,767, the 20-period SMA aligns as the next support at $1,764 ahead of $1,760 (Fibonacci 50% retracement).
On the flip side, the pair could target $1,790, once again, if it closes a four-hour candle above $1,775 (Fibonacci 23.6% retracement). Finally, $1,800 (psychological level) could be seen as the next target on the upside if bulls retake control of the price.
Additional levels to watch for
Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
