Gold price action on the XAU/USD has seen a pushback of about 0.64%, even as the US Dollar extended gains that it notched up late in the New York session on Monday. The greenback gained broadly as investors sought safe havens, following the asset war between retail and institutional traders that led to significant volatility.
Expectations of large-scale borrowing by the US government as part of stimulus measures triggered an increase in bond yields of US Treasuries. This factor was also fingered in Tuesday’s downside move on gold, which is typically non-interest yielding. Losses have been capped by the measures taken by Democrats to bypass Republicans and pass the $1.9trillion stimulus that US President Joe Biden promised. Gold is trading at $1848 as at the time of writing.
Technical Levels to Watch
As indicated yesterday, it was difficult to see further upside in gold prices, especially as the US Dollar gained broadly yesterday and the silver price pump found a limitation.
The Downside move came as a rejection off the larger channel’s upper edge, and this move has found support at 1850.78. This is also the location of price on the lower boundary of the small ascending channel. A breakdown of 1850.78 also breaks down this boundary, and opens the door towards 1821.55. A move towards 1800.34 is also possible if the USD consolidates on its gains.
On the flip side, a recovery from 1850.78 that comes off a bounce on that level targets 1881.99 initially, but this move has to breach 1869.39 and the larger channel’s upper border. 1900.76 is where the smaller channel’s upper edge intersects the horizontal price level. A move above this zone could locate 1918.68.
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XAU/USD Daily Chart
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