- Gold gained positive traction for the second straight session on Tuesday.
- The slightly overbought RSI deserves caution before placing new bullish bets.
- Any pullback can be seen as a buying opportunity and remain limited.
He oro It built on overnight bullish breakout momentum through downtrend line resistance and spiked to nearly two-month highs around the $ 1,952 region on Tuesday.
The momentum was well supported by the prevailing bearish sentiment around the US dollar, which tends to benefit the dollar-denominated commodity. Aside from this, nervousness ahead of the U.S. Senate second-round elections in Georgia and concern over the surge in COVID-19 cases further supported the demand for the XAU / USD as a safe haven.
Meanwhile, the RSI on the hourly / daily charts already shows mild overbought conditions and warrants caution for bullish traders. Therefore, any subsequent bullish movement is likely to face strong resistance near the $ 1,960-65 congestion zone. The mentioned barrier coincides with the 61.8% Fibonacci level of the $ 2,075 – $ 1,764 drop.
This makes it prudent to wait for a sustained move past the $ 1,960-65 hurdle before positioning for any further appreciation moves. The XAU / USD could accelerate the momentum and aim to regain the key psychological level of $ 2,000 for the first time since August 2020.
On the other hand, immediate support is linked to the $ 1,930 level and is closely followed by the 50% Fibonacci level. Any further decline could be seen as a buying opportunity, which, in turn, should help limit the decline near the breakout point of trendline resistance, now turned into support, currently near the 1.890 region. -85 $.
The latter also marks an important confluence region, comprising 38.2% Fibonacci level and an ascending trend line of more than a month. A convincing break below will negate the prospects for further gains and drag the yellow metal further below the intermediate support at $ 1,860. The downward trajectory could be extended to test the 23.6% Fibonacci level around the $ 1,840 region.