• XAU/USD has recently pushed back above $1820 and, in doing so, moved back above its 21DMA.
  • The bulls will be eyeing a move towards the next key resistance area around $1830.
  • XAU/USD has been taking advantage of the subdued FX markets and a slight pullback in US government bond yields.

Spot gold (XAU/USD) prices have been picking up steam in recent trade and recently rallied to the north of the 21-Day Moving Average at $1818 and above the $1820 level. At current levels around $1823, the precious metal is trading with on-the-day gains of about 0.8%. Now that resistance in the form of last week’s high at $1815 has been breached, the bulls will be eyeing a move towards the next key resistance area around $1830.

XAU/USD has been taking advantage of the subdued tone to trade in FX markets (where the DXY is flat) and a slight pullback in US government bond yields from multi-month/year highs hit last week after strong US jobs data. Analysts have pointed out that, in recent session’s weeks, the precious metals’ negative correlation to the US dollar and US yields has weakened. That implies the precious metal might not be quite as vulnerable as it normally would be to an upside surprise in this week’s US Consumer Price Inflation data, which is scheduled for release on Thursday.

Market commentators have been citing elevated demand for inflation protection (in no small part due to the recent surge in oil prices) and safe-haven demand as geopolitical tensions remain elevated as driving recent upside. Indeed, XAU/USD is now more than 2.0% up from the lows it printed in the $1780s just seven sessions ago.

With the precious metal having found strong uptrend support in the $1780s and now successfully made it back above its major moving averages (21, 50, 200), the technical momentum for a return to and test of annual highs in the $1850s appears to be there. Perhaps gold might even be able to test its November highs near $1880. In the long run, however, it remains to be seen whether XAU/USD can resist the tide of a global rise in interest rates.

This article was originally published by Fxstreet.com.Read the original article here.

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