Gold price on the XAU/USD pair failed to recapture ground above the $1800 psychological resistance, dropping nearly 1% in the process. Gold price activity now has a bias for downside targets as it continues to remain pressurized by the market fundamentals.
Broad-based selling on the greenback failed to rescue the yellow metal, as the US 10-year bond yield surged 4.83% at the time of writing and remains on bid. This is not surprising as an increase in bond yields causes a shift from non-yielding assets such as gold to the yielding bond market. Bond yields continue their ascent as US Fed Chair Jerome Powell said nothing about any intentions by the Fed to take measures to control the yields.
Technical Outlook for Gold Price
The XAU/USD is currently testing support at the 1789.49 price level, which also marks the 2nd time this support area has been tested by the daily candle. A bounce from this area targets the lower border of the triangle as it crosses the 1800.00 psychological price level. A break above this level provides free passage towards the weekly resistance at 1815.20. However, the upper boundary of a developing descending channel could prove to be too much of a barrier to buyers, which could fuel renewed selling on this rally. If gold price can scale above this barrier, then 1851.23 and 1881.68 could come into the picture as additional upside targets.
On the flip side, a breakdown of the 1789.49 support allows 1763.30 to become a viable new target. This support also forms a barrier for sellers as 1741.01 and 1699.43 beckons. These latter targets become viable if 1763.30 gives way.
XAU/USD Daily Chart