Analysis: Gold (XAU/USD)

*Gold Broke the Triangle –But Will It Be Able To Retest Key Psychological Mark of 2050*

*Previous Trading Session*

• On Tuesday, gold gave a bullish breakout out of the symmetrical triangle pattern and made highs of 2047.05, 

• However, minor corrections were witnessed from the highs and gold ended the trading day above 2039.43.

*Current Situation*

• On Wednesday, gold looks steady near 2-week highs near 2040.

• It has sustained above the key support of 2039.43, which was previously acting as resistance.

*Analysis*

• The gold seems to be driven by the weakness in the US dollar.

• The US treasury yield on the benchmark 10-year note was down about 2 basis points at 3.933%, having fallen below 4%.

• Further, Sticky inflation in the Euro Zone raises the probability of further rate hikes, which has negatively impacted dollar prices.

• On Tuesday, Euro Zone announced a little lower inflation data, but experts still find inflation on the higher side and express higher probabilities of rate hikes in the upcoming months. 

• Higher Inflation -> rate hikes in Euro Zone -> provide minor strength to Euro -> weaken US dollar -> strengthen gold

• Furthermore, bullish sentiments favoring gold receive support from geopolitical risks and concerns regarding an economic slowdown in China.

*Technical Indicators:*

• Gold is currently trending in a buying zone as per technical indicators, which signals further bullishness.

• Gold on Wednesday hovers above the middle band of the Bollinger Band as visible on the attached H4 chart.

• The CCI levels also hover in the buying zone near 98.25 levels.

*Projection:*

• Nothing has changed for Gold and it still looks uncertain, hence, take your trades very cautiously. 

• The choppy movement will continue till the US session, in which important CB Consumer Confidence and Existing Home Sales data is going to be released.

*Important Levels to Watch*

*It is noteworthy that our previously given levels during late November are still respected by the gold prices – as visible on the attached H4 chart of Gold*

• Resistance: A bullish acceptance above 2041.15 is significant for the Gold price to resume its journey higher toward the 2050 psychological level and 2058.68.

• Support: To begin a declining trend, gold must give a daily closing below 2033.72. Below the correction mode will begin with the next support at 2014.35

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