Gold has been extending its gains after breaking above $1800 beforehand and changes hands near $1840. The yellow metal eyes additional upside – XAU/USD is set to test 200-DMA at $1851 amid US dollar’s dead cat bounce, FXStreet’s Dhwani Mehta reports.
RSI remains bullish, a test of 200-DMA likely on the cards
“The upbeat market mood amid vaccine optimism is underpinning the recovery in the Treasury yields, which saves the day for the dollar bulls, the greenback’s pullback appears shallow amid a risk-friendly market environment and dovish Fed expectations though.”
“Gold traders are taking a breather before resuming the uptrend. In absence of significant economic data from the US, gold prices will continue to remain at the mercy of the dollar and yields.”
“The odds remain in favor of the bulls, as they keep their sight on the 200-daily moving average (DMA) at $1851. Ahead of that the gold price needs to take out Friday’s high of $1843. Only a daily closing above the 200-DMA could call for a retest of the $1900 psychological barrier.”
“The Relative Strength Index (RSI) lies just beneath the overbought region, currently at 68.44, pointing to additional upside potential.”
“If the correction regains momentum, gold prices could fall back towards Friday’s low of $1813. The $1800 threshold could emerge as strong support for the XAU buyers.”
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