Gold (XAU/USD) is expected to retest daily highs at $1867 this week. The precious yellow metal found some massive bids around $1850 levels amid the revival of hopes on a likely US fiscal stimulus.
The risk sentiment got a fresh boost alongside gold prices, as the US dollar eased across the board after growing reports that US President Joe Biden is scheduled to meet a group of Republican senators later on February 1, 2021 to discuss the Covid relief package. The Republican legislators have cut down the stimulus package to about $600 million.
Notably, the Wall Street retail-trade mayhem and the current rally in the silver prices also keep the sentiment around the gold market underpinned. But, the vaccine optimism in the Euro area may limit the gains in the precious metal.
The near-term bias, looking at it technically, seems bullish amid a bull flag that was confirmed on the 15-minutes chart on the previous candles. The RSI (Relative Strength Index) is now holding steady above the midline, indicating that there is more room available to the upside.
The spot market trades above all the major averages on the given timeframe, having seen a bullish crossover earlier in the Asian session. Interestingly, the 21-simple moving average (SMA) cut the 50-HMA from below representing a bull cross. Any form of break below the falling trendline support located at $1858 may invalidate the pattern, opening the floors for a test of the 50-SMA at $1855.