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XAU/USD braces to $1,750 ahead of the weekend


  • Gold clings to $1,750 on the back of Thursday’s rally and greenback weakness.
  • Falling US-T bond yields lift XAU/USD prospects for higher prices.
  • From a technical perspective, gold stills tilted to the downside.

Gold is advancing for the second consecutive day, trading around $1,759.19, up 0.13% during the day at the time of writing. The market sentiment is mixed, as European stock indices posted losses between 0.04% and 0.84%, whereas major US equity indices like the Dow Jones, the S&P 500, and Nasdaq Composite, rise 1.24%, 0.91%, and 0.28%, respectively.

Fallung US-T bond yields, underpins XAU/USD

Meanwhile, the US 10-year Treasury yield, which underpinned this week’s dollar rally, is falling five basis points (bps), sitting at 1.475% for the first time since Monday. Further, democrat progressives are looking to stall the vote of the $550 billion infrastructure bill if the House and the Senate don’t approve first the $3.5 trillion tax and spending package.

That said, the US Dollar Index, which measures the greenback’s performance against a basket of six currencies, is sliding for the second day in a row, declining 0.25%, clinging to 94.02, as has been held under pressure amid US political uncertainty.

XAU/USD Price Forecast: Technical outlook

Daily chart

Thursday’s $40 spike provided a new higher support level for XAU/USD, at June’s 29 low around $1,750.60. Nevertheless, the price action stills tilted to the downside, with the daily moving averages well above the spot price, lying around the $1,783-$1,809 range.

Gold buyers, to regain control, will need to break above $1,800, but there would be some hurdles on their way. The first resistance would be the 50-day moving average (DMA) at $1,783.00, immediately followed by the 200-DMA at $1,801.00. A break of the latter could exert upward pressure on XAU/USD leaving the 100-DMA at $1,809.00 as the next resistance level.

On the flip side, XAU/USD sellers will need a daily close below June’s 29 low at $1,750.60 in their attempt to resume the downward bias. In case of that outcome, the first support for gold would be the September 29 low at $1,721.52. A breach of that swing point could pave the way for further losses. The following demand levels would be the psychological $1,700.00, and then the August 9 low at $1,687.19.

Momentum indicators like the Relative Strength Index (RSI) at 46 support the downward bias, as it stills below the 50-midline, suggesting that price is consolidating before resuming another leg down.

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