- Gold bulls gathering pace for the next push higher.
- Dollar weakness amid easing US-China tensions, US riot offer support.
- Bullish technical set up suggests further gains ahead of US ISM PMI.
Gold prices (XAU/USD) are trading with sizeable gains in Monday’s thin Asian market conditions, trading near a new weekly high of $1740.74.
The extension of last week’s rally in the yellow metal is mainly driven by the sell-off in the US dollar across the board, in the wake of US-China trade war relief and escalating US riots.
Friday’s US President Donald Trump’s speech on China’s forceful national security legislation on Hong Kong was softer-than-expected and did not target the trade relationship between the two countries. Therefore, the risk appetite returned and killed the haven demand for the greenback, which in turn benefitted gold.
Looking at the near-term technical outlook for the precious metal, the further upside appears more likely, as the price is teasing a rectangle pattern breakout on the 15-minutes chart around 1741 levels. A breakout would call for a test of the intraday pattern target at $1750. Should the bulls sustain above the 1750 level, the multi-year highs at 1765.38 will be on the buyers’ radar. The Relative Strength Index (RSI) holds well above the midline (50.0), near 60, suggesting further room for the upside, with the US ISM Manufacturing PMI next of relevance.
The spot could remain supported so long as it holds above the upward sloping 21-bar Simple Moving Average (SMA) at 1737.44. A break below which, the bullish 5-bar SMA at 1734.86 could be tested. Further south, the 1730 level could come back into play ahead of the pattern horizontal trendline support at 1732.39.
Gold: 15-minutes chart
Gold: Additional levels
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