Gold prices edge higher as U.S. Treasury yields retreat
Gold prices edged higher on Tuesday as a retreat in U.S. Treasury yields and optimism over the $1.9 trillion coronavirus relief bill lifted the allure of the non-yielding metal.
Benchmark U.S. Treasury yields eased further from a one-year high hit last week as Federal Reserve officials continued to downplay runaway inflation concerns.
The U.S. Senate will start debating President Joe Biden’s coronavirus relief bill this week, Senate Majority Leader Chuck Schumer said on Monday.
· Gold Price Outlook: Gold Recovery First Test at Trend Resistance
Gold struggles to carry the uptick from an intraday low of $1,707, also the lowest since mid-June 2020, while taking rounds to $1,713, down 0.62% on a day, during early Tuesday.
In doing so, the yellow metal drops for the sixth day in a row while extending the downside break of a descending support line from January 18.
Although RSI conditions keep testing gold sellers, a sustained break of the previous key support directs the bullion further towards the south.
In doing so, the $1,700 becomes the immediate support ahead of a 61.8% Fibonacci retracement level of March-August 2020 upside, near $1,688. If at all the metal bears refrain from stepping back near $1,688, a downward sloping trend line from August 12, at $1,682 now, will be the key to watch.
On the contrary, the previous support line, currently around $1,756, precedes 50% of the Fibonacci retracement near $1,763 to test the commodity’s corrective pullback.
Though, the bulls will wait for a clear break of a two-month-old resistance line, at $1,800 now, for fresh entries.
· Gold Price Analysis: Technical chart suggests a make-or-break moment for XAU/USD
“The price of gold will remain at the mercy of the US dollar dynamics while the price action in the US Treasury yields will be also closely followed amid a lack of relevant US economic data. Markets could also resort to profit-taking after the recent sell-off.”
“Gold’s 4-hour chart shows that the price is on the verge of confirming a falling channel breakdown if it closes the candle below the trendline support at $1712. Should the pattern get validated, a drop towards the June 2020 lows at $1671 cannot be ruled out.”
“If the XAU bulls manage to defend the critical support, a rebound towards the bearish 21-simple moving average (SMA) at $1755 could be in the offing.”
· DailyFX: GOLD TECHNICAL ANALYSIS
Gold is pressuring the 78.6% Fibonacci extension at 1715. Confirming a daily close under this price would expose the 1658 – 1678 support zone from last year – see chart below. Moreover, XAU/USD confirmed the break under the November low, opening the door to resuming what has been the key downtrend since August. In the event of a bounce, keep a close eye on falling resistance from December.
Reference: CNBC, FXStreet, DailyFX
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