Bullish Confirmation for Gold Prices
Gold prices have received bullish confirmation from key technical indicators, according to Arslan Butt, Lead Commodities and Indices Analyst at FX Leaders. The price of gold (XAU/USD) is currently trading around the $1,937-38 range, exhibiting limited upward momentum despite hovering at its highest level in three weeks.
Traders are looking for further indicators to solidify the dovish stance on the US Federal Reserve (Fed), especially after disappointing US data. The performance of U.S. Treasury bond yields and ongoing U.S.-China tensions are also providing headwinds for gold bulls.
Despite a clear breakout above a monthly resistance level, gold’s price struggles to maintain its upward trajectory due to overbought conditions signaled by the Relative Strength Index (RSI). The 50% Fibonacci retracement level of the July-August decline, located around $1,836, poses an additional challenge. However, if gold sustains its position above the 200-day Simple Moving Average (SMA) and the support level, disregarding the overbought RSI, bulls could potentially target the 61.8% Fibonacci ratio at approximately $1,948.
On the other hand, an inclining resistance trend line from July 20, located near $1,958, will present an obstacle for gold buyers. A clear break below the SMA and monthly support could trigger a selloff. However, an ascending trend line originating from August 31 at $1,817 could potentially challenge bears before giving up control.
Overall, the sentiment for gold’s price remains bullish unless it breaches the support level at $1,817.
