Gold price on the XAUUSD touched off the 1764 mark a few minutes ago on the back of heavy USD selling. A troy ounce of gold touched off the 1767.42 mark to achieve the best price it has attained since October 2012 as the XAUUSD gains 0.58%.
The US Dollar has been under heavy selling pressure since yesterday, and today’s better-than-expected Flash Manufacturing and Services PMI in Germany gave a substantial boost to investor confidence on the recovery of the global economy from the coronavirus pandemic. This price move goes to confirm the CFTC Positioning Report which indicated that there had been a net increase in USD short positions in the last week, as traders start to take on risky sentiment in the market.
A look at the USD Index shows that it is approaching 96.56, registering a second day of losses as the greenback continues to weaken relative to its peers.
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Outlook for Gold Price
Gold price has broken out of the descending channel on the daily chart, which acted as a retracement pattern against the prevailing uptrend. Having broken the channel with two consecutive candle penetrations above this channel on the daily chart, gold price now sets its sights on achieving the next resistance target at 1792.26, formed by the previous tops of the monthly candles of November 2011, February 2012 and October 2012. Beyond this level, the all-time highs at 1920.22 beckons, although this is more of a medium-term target than a short-term one. A possible near-term resistance target above 1792.26 would be the 1824.74 price level, where the August and September 2011 candles closed.
On the flip side, if price fails to gain significant traction beyond the latest high, we may see a pullback in the near-term towards the 1753.92 (78.6% Fibonacci retracement from the swing low of this week to today’s high), or we could see a further retracement to 1738.54 or 1730.06. 1722.30 remains a significant support level (multi-year lows of August and September 2012 as well as highs of August and September 2019).
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