- Gold gained some follow-up traction for the second straight session on Thursday.
- Momentum back above the $ 1,720 level supports prospects for additional short-term gains.
- The slightly overbought RSI on the 1 hour chart warrants caution for aggressive bull traders.
The oro it rose throughout the early North American session and updated the daily highs, around $ 1,725 in the last hour. This marked the second day in a row of a positive move and was sponsored by a softer tone around the US dollar, which tends to benefit dollar-denominated commodities.
The benchmark 10-year US government bond yield extended this week’s retracement decline from the highest level since January 2020 and fell below 1.70% on Thursday. This was seen as a key factor that kept the USD bulls on the defensive and acted as a tailwind for the non-performing yellow metal.
From a technical perspective, the overnight bounce from the $ 1,677-76 zone constitutes the formation of a double bottom, a bullish reversal pattern on the daily chart. A subsequent move above a previous support break point, around the $ 1,720 region, could have set the stage for further gains.
The constructive outlook is bolstered by the fact that the technical indicators on the daily chart have been recovering from bearish territory and gaining positive traction on the 4-hour chart. That said, the slightly overbought RSI (14) on the 1 hour chart warrants caution for intraday bullish traders.
Therefore, any upward movement is more likely to face strong resistance near the $ 1,733-34 region. Some subsequent purchases have the potential to lift the XAU / USD further to test the $ 1,744-45 region, which if decisively cleared will be seen as a new trigger for bull traders.
On the other hand, immediate support is pegged at the $ 1,712-10 zone. This is followed by the $ 1,700 level, below which the precious metal could pull back to retest the double-bottom support near the $ 1,677-76 region. Some follow-up selling will negate any short-term bullish bias and pave the way for the resumption of the recent / well-established bearish trajectory.
4 hour chart
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