Gold Price Analysis: XAU/USD rises further to fresh multi-year highs above $1840
- Weaker US dollar across the board keeps boosting XAU/USD.
- Despite overbought readings, the yellow metal keeps going north.
Gold extended daily gains and climbed to $1842/oz hitting the highest level since September 2011. As of writing, it is trading near the top, holding onto to a daily gain of almost $25.
The key driver continues to be a weaker US dollar. The greenback is falling sharply across the board with the DXY trading 95.20, down 0.65%, having the worst daily performance in weeks.
In Wall Street, the Dow Jones is testing the 27,000 area, up 1.15% while the Nasdaq corrects lower 0.40%. The improvement in market sentiment follows the agreement between European leaders for the recovery fund and optimism about a COVID-19 vaccine.
Another driver of USD weakens are US yields. The 10-year yields reached levels under 0.60% for the first time since July 10. The dollar is falling against majors, including safe-havens CHF and JPY, but also versus commodity and emerging market currencies.
Technical levels
Short-term technical indicators in XAU/USD point to overbought readings but no sign of a correction are seen at the moment. If the metal continues to rally, a natural resistance is seen at $1850, followed by the $1880 area. On the flip side, the immediate support is located at $1835, and then $1815/20 (July 8, 9 & 20 high).
Author
Matías Salord
FXStreet
Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.
