Gold price (XAU/USD) continues to gain momentum on the day, as weakness in the greenback continues to be the dominant fundamental player in the pair. Commerzbank and HSBC are already predicting higher gold prices, with the latter indicating that there would be an easing of US Treasury yields and the greenback later in the year, favouring gains in the XAU/USD.
Karen Jones, Head of FICC Technical Analysis Research at Commerzbank, says that the completion of a small base in the chart’s pattern at 1756/1677 could offer a measured move to a target at $1835.
Lower US bond yields and the accompanying decline of the greenback are helping gold prices recover. After a steep 3.06% decline on Tuesday, US 10-year bond yields only notched 0.97% (as of writing), leaving the sentiment in the Treasury market weak and boosting non-yielding metals.
Today’s 1.13% gain in gold prices has helped gold prices to 6 out of 7 winning sessions, as $1800 comes into view.
Technical levels to Watch
The bounce off the 1763.30 support provided the impetus for the upsurge seen on Wednesday. The active candle has violated the 1789.49 resistance, but confirmation is needed for bulls to assert themselves on the path towards 1815.53. Above this price level, the next resistance barrier exists at a possible supply zone, which has 1828.54 as the floor and 1840.55 as the ceiling. The move to this demand zone must supersede the measured move of the bullish flag pattern.
On the other hand, if the price falters at the existing price area (price projection from the bullish flag and 1800 psychological resistance), then we could see a pullback and retest of the 1789.49 price level, with 1763.30 and 1741.01 also serving as potential support levels. Below these areas, 1719.13 could be an additional downside target if price decline below 1741.01.