Gold price surged to 7-week highs as the greenback continues to struggle under the weight of dovish comments from the Fed’s board members. Despite a slight rebound in the US bond yields, the greenback found no joy amid the continued risk-on sentiment that has pervaded the markets for most of the week.
Gold price has gained 0.88% on the day after China’s record GDP growth spurred risk-on sentiment. This sentiment was buoyed by comments of Fed Governor Christopher Waller, who said in a CNBC interview Friday that markets were “getting ahead of themselves in terms of expecting rate hikes”. These comments also follow similar dovish comments from several FOMC members within the week.
As it becomes more obvious that the Fed may adopt a “lower for longer” approach to interest rates, investors offered the greenback, allowing gold price to gain additional upside momentum. The XAU/USD pair now looks set to end the week higher.
Technical Levels to Watch
As expected, the bullish flag on the XAU/USD daily chart resolved in favour of a bullish breakout, with the price quickly approaching the measured move’s price projection at 1789.49. Additional weakness on the US Dollar could help bulls propel the price towards the 1815.20 resistance barrier, with 1840.00 serving as an additional upside target.
On the flip side, a rejection at the projected end-point of the measured move from the flag at 1789.49 could lead to a retracement pullback, targeting 1763.30 initially. A further decline retests the junction of the flag’s upper border and horizontal support at 1741.01, with 1719.13 serving as a further target to the south.
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Gold Price (XAU/USD) Daily Chart
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