- The USD sell-off extends amid optimism over US stimulus, driving gold prices higher.
- A pessimistic Fed also offers fresh enthusiasm to the XAU bulls.
- The focus is on stimulus talks and US employment data for new momentum.
He oro (XAU / USD) has regressed rapidly from the new monthly highs of $ 1,883 reached during the European session on Thursday, although it remains strong amid the persistent weakness of the US dollar in all fields.
Progress in a possible US fiscal stimulus agreement has made a dent in the safe-haven appeal of the US dollar, reinforcing gold’s big breakout above the $ 1,850 level. In addition, adding to the upward movement of gold is the Fed commitment to continue with its bond purchase program until your inflation and employment targets are met.
Ample liquidity in the markets turns positive for goldAs it stimulates the demand for the precious metal as a hedge against inflation and currency devaluation.
Also, it is worth noting that real U.S. yields have resumed their downward trend, strengthening the bullish argument for gold.
“The 10-year real yield fell to -0.98% on Monday, having started the month at -0.89%, according to data provided by the US Department of the Treasury. The nine basis point drop in real US yields appears to have favored the yellow metal this month, “explained Omkar Godbole, analyst at FXStreet.
Looking ahead, the yellow metal will remain at the mercy of dollar dynamics and market sentiment while awaiting updates on the US stimulus package and weekly jobless claims data.
4 hour chart gold
The 4-hour chart of XAU / USD shows that the price has come out of a descending triangle formation today.
The latest bullish move could be attributed to the bullish crossover confirmed in recent hours. The 21 SMA has crossed to the 50 SMA from below, validating a bullish crossover.
However, the overbought condition on the RSI warrants caution for the XAU bulls. Therefore, a brief pullback towards the resistance of the pattern, now converted from support, cannot be ruled out at 1.865$.
Lower, the 200-period SMA in 1.858$ it could come back into play.
On the other hand, recovering the level of 1.900$ it would be inevitable if the bulls defy the RSI warning.
Additional Gold Levels
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