Analysis: Gold (XAU/USD)

*Previous Trading Session*

• On Tuesday, Gold price extended its daily uptrend and rose to a fresh multi-week high above $2,060. 

• The benchmark 10-year US Treasury bond yield stays in negative territory below 3.9% after soft US PCE inflation data, allowing XAU/USD to gather bullish momentum.

*Current Situation*

• The gold has shown a strong bullish momentum during Tuesday’s early Asian Session, despite the steady US dollar. 

• Gold extended the previous week’s strength and it retested the upper trend line of the symmetrical triangle pattern as the day began on Tuesday post-Christmas Holiday.

• Gold currently consolidating at the upper trend line of the triangle pattern – signaling further bullishness. However, it is crucial for gold to give a higher breakout out of the triangle to test higher resistance levels.

• Currently XAU/USD is hovering near 2064.88

*Analysis*

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

• The 10-year U.S. Treasury yield on Wednesday hit its lowest level since July. The yield on the benchmark 10-year Treasury note fell 7 basis points to 3.849%. On July 27, the 10-year yielded as low as 3.839%.

• Further, Sticky inflation in Euro Zone raise probabilities of further rate hikes, which has negatively impact dollar prices.

• Safe-haven demand for gold increased amid a significant selloff in equities, and due to the escalation of terrorist activities in Red Sea – a major maritime trade route. 

*Technical Indicators:*

• Gold continues to trend in the bullish zone as per technical indicators.

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

• The CCI levels also lies above the 0.0 level near 112 levels.

• As per the technical indicators, the prices are expected to take a minor correction before resuming its bullish trajectory.

*Important Levels to Watch*

• Resistance: A bullish acceptance above the symmetrical triangle pattern, intraday highs of 2065.15 will drag prices till the 2095 level. Above which, gold price to resume its journey higher toward a new all-time high level.

• Support: To begin a declining trend, it is important that gold gives a daily closing below 2058.68. Below the correction mode will begin with the next support at 2043.29.

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