- The XAU / USD reversed its direction after falling towards $ 1,720.
- Renewed USD weakness is providing a boost to XAU / USD.
- The next hurdle to the upside is at $ 1,740 before $ 1,745.
The pair XAU / USD It fell to a daily low of $ 1,723 at the start of the European session, but took a 180 degree turn in the last hour. Driven by renewed selling pressure around the dollar after the inflation data, gold surged into positive territory and was last seen gaining 0.3% on the day at $ 1,738.
Gold technical outlook
The Relative Strength Index (RSI) indicator on the four-hour chart rose above 50 with the latest rally, suggesting that bullish momentum is gathering steam. On the upside, the first hurdle is lined up at $ 1,740 (Fibonacci retracement of 23.6% from the March 31-April 8 rally) ahead of $ 1,745 (static level). A daily close above the latter could open the door for further gains towards $ 1,755, where the 50-day SMA is located.
On the other hand, the 50-period SMA acts as the first dynamic support at $ 1,735. Furthermore, strong support appears to have formed at the $ 1,723 – $ 1,727 area (100-period SMA, 200-period SMA, Fibonacci 38.2%). A daily close below that level could attract more sellers and trigger a bearish reversal.