XAU / USD remains near $ 1,780 despite the recovery in US Treasury yields.

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  • Gold is trading above $ 1,780 at the beginning of the US session.
  • The 10-year US Treasury yield rose to positive territory above 1.6%.
  • The dollar remains on the defensive after disappointing data from the United States.

The pair XAU/USD it topped $ 1,770 in the European session and rose to a daily high of $ 1,785 in the last hour before dipping slightly. At time of writing, the pair was up 0.85% on the day at $ 1,780.

Hours earlier, widespread selling pressure surrounding the dollar and falling US Treasury yields fueled the rally in gold.

With risk flows dominating financial markets, the US Dollar Index (DXY) fell to a multi-week low of 93.50. US data showed Tuesday that housing starts and building permits fell 1.6% and 7.7%, respectively, in September. Although the initial market reaction to these readings was largely subdued, the dollar began to find some demand thanks to the recovery in US Treasury yields.

At the moment, the benchmark 10-year US Treasury yield is up 0.5% on the day to 1.61% and the DXY is down 0.28% to 93.68, limiting gold’s rise for the time being.

Meanwhile, major US stock indices remain on track to open into negative territory, suggesting that the dollar is likely to remain on the defensive if market sentiment remains bullish in the second half of the day.

There will be no high-level data releases from the US for the remainder of the day and investors will remain focused on the perception of risk and returns.

Gold technical outlook

The Relative Strength Index (RSI) indicator on the four-hour chart hovers near 60, suggesting there is more room to the upside before gold becomes technically overbought. Also, the previous two candles on the same chart closed above the 200-day SMA, confirming the bullish bias.

Initial resistance is at $ 1,787 (September 22 high) before $ 1,800 (psychological level, static resistance). On the downside, $ 1,770 (previous resistance, 200-period SMA) lines up as the first support before $ 1,763 / 60 (static level, 100-period SMA) and $ 1,750 (static level).

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