- A rally in US bond yields, modest USD strength limited gold near the 100-day EMA.
- The recent break through the neckline double bottom resistance favors bullish traders.
- XAU / USD appears poised to break above $ 1,800 and test the $ 1,815-16 barrier.
The oro it rose for the second consecutive session on Wednesday, although it lacked subsequent buying and remained capped below the 100-day EMA. The commodity last traded just above the $ 1,780 level, an increase of around 0.20% on the day.
Renewed fears about another dangerous wave of coronavirus infections in some countries continued to weigh on investor sentiment and benefited XAU / USD as a safe haven. However, a rally in US Treasury yields allowed the US dollar to rebound further from multi-week lows and limited gains for the dollar-denominated commodity.
Looking at the technical picture, last week’s move past the $ 1,760-65 hurdle validated a double bottom formation near the $ 1,677-76 region. The constructive setup is bolstered by bullish technical indicators. This, in turn, supports the prospects for an eventual breakout through the aforementioned barrier and additional short-term gains.
Therefore, a subsequent strength towards $ 1,800, en route to the next relevant hurdle near the $ 1,815-16 area, remains a clear possibility. The latter coincides with the 50% Fibonacci level of the $ 1,959 -1,676 drop, which if decisively cleared will set the stage for an extension of the appreciation movement observed since early April.
On the other hand, the breakout point of the double bottom resistance, around the $ 1,765-60 region should now protect the immediate decline. This is followed by support near the 23.6% Fibonacci level, around the $ 1,745-44 area and the $ 1,730 level. Sustained weakness below will negate the positive outlook and lead to some aggressive technical selling.
The XAU / USD could become vulnerable and accelerate the slide to challenge the $ 1,700 level. Some follow-up selling would expose double-bottom support, around the $ 1,677-76 zone, or multi-month lows touched in March.
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