Gold Price Analysis: XAU/USD to gain bullish momentum above the strong $1720 support

Gold (XAU/USD) built on its recent bounce from multi-month lows, around the $1,677-76 region and edged higher during the first part of the trading action on Tuesday. As FXStreet’s Haresh Menghani notes, bulls are looking to seize control above the $1,720 pivot.

XAU/USD to validate a bullish double-bottom once above the $1760-65 area 

“The upbeat outlook for the US economy might keep a lid on any further gains for XAU/USD. Investors remain hopeful about the prospects for a relatively faster US economic recovery. This, along with the Biden administration's planned stimulus of more than $2 trillion, has been fueling speculations about a possible uptick in US inflation and raised doubts that the Fed would retain ultra-low interest rates for a longer period. This should help limit any meaningful decline in the US bond yields and further collaborate to cap the upside for the metal.”

“The ongoing positive move validates the formation of a bullish double-bottom near the $1,677-76 area. The pattern, however, will be confirmed once the metal breakthrough previous strong support breakpoint, now turned resistance near the $1,760-65 region. In the meantime, the $1,742-44 supply zone could act as an intermediate barrier.”

“The $1,720 horizontal level now becomes immediate strong support to defend. This is followed by the $1,700 mark, which if broken decisively will negate any positive bias and turn the commodity vulnerable to retest the $1,677-76 region. Some follow-through selling will be seen as a fresh trigger for bearish traders and pave the way for an extension of the recent downward trajectory towards the next relevant support near the $1625 level. Gold could eventually drop to the $1600 round-figure mark in the near-term.”