- Gold gained traction for the fourth day in a row amid renewed USD sell bias.
- Rising US yields, risk appetite could limit any further gains.
- Aggressive signals from major central banks could also act as a headwind for the metal.
The oro (XAU) it gained traction for the fourth day in a row and soared to the $ 1,800 zone, back near a month-long high heading into the American session on Friday. The boost was exclusively sponsored by the emergence of new sales around the US dollar, which tends to support demand for the dollar-denominated commodity. The USD slide lacked an obvious fundamental catalyst and remained limited amid high US Treasury yields This, coupled with a generally positive tone in equity markets, could contain any further gains for the safe haven of the XAU / USD.
The 10-year US government bond yield remained stable near the 1.70% level, or the highest level since May amid expectations of an early policy adjustment by the Fed. FOMC released last week reaffirmed that the US central bank remains on track to begin rolling back its massive pandemic-era stimulus by the end of this year. Markets have also weighed in on the possibility of an interest rate hike in 2022 amid concerns about a faster-than-expected rise in inflation. This further contributed to the recent rally in bond yields.
technical perspective
From a technical perspective, a sustained strength beyond $ 1,800 will confirm a short-term bullish breakout through the obstacle of the confluence of the 100/200 day SMAs. This will set the stage for a further short-term appreciation move for gold and push xau prices to the next relevant resistance near the $ 1,816-18 zone. Momentum could extend further to challenge a key barrier near the $ 1,832-34 high supply zone.
On the other hand, the $ 1,789-88 zone now appears to protect the immediate downside before the daily lows, around the $ 1,783-82 zone. This is followed by support near $ 1,775 and the $ 1,763-60 zone, which if broken will negate any positive short-term bias. XAU / USD could become vulnerable to break below the $ 1,750 support and accelerate the slide towards September’s monthly lows around the $ 1,723-21 region.
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