Gold staged a strong rebound on November 26, 2021, and reclaimed $1,800. This intense flight to safety is causing the US Treasury bond yields to plunge steeply and fueled the XAU/USD rally. The investors now await the news on the vaccines’ effectiveness against the new coronavirus variant.
Based on the Technical Confluences Detector, the price of gold stays stronger above the critical support around $1,790, the intersection of the Fibonacci 61.8% one-day, SMA50 one-day, and a previous low on the four-hour charts. But, the bulls have to conquer the $1,800 resistance to retake control of the market.
The same parameter includes the Fibonacci 23.6% one-month, upper Bollinger Band on one-hour, and the previous highs on 15-minute and one-hour. If the bulls and buyers manage to take control of the $1,800 threshold, the pivot point one-week S3 and a previous high on the 4-hour will function as the validation point for more upside movement around $1,802.
After that, a smooth run towards Pivot point one-month R1 and previous month high, that surrounds $1,816-17 cannot be ruled out. On the other hand, $1,795 challenges the gold sellers on an instant basis, the level features SMA10 one-hour, Fibonacci 23.6% one-day, SMA100 one-day, and Bollinger Band four-hour Middle.
Also acting as near-term support is the $1,792 mark that holds together SMA50 one-hour, SMA200 one-day, and Fibonacci 38.2% one-day. Moreover, a clear break of $1,792 will need some validation from the $1,790 support before fetching the quote towards $1,781 support including pivot point one-day S2.
Fundamental Overview
Gold pokes intraday highs to mark its heaviest daily run-up in a week, up 0.55%, about $1,799 going into the American session. The precious yellow metal benefits from the drop in US Treasury yields to extend the past day’s recovery moves, mostly due to the COVID variant woes.
With that said, the 10-year bond coupon plunged the most since July 2021, and its 2-year counterpart marked the biggest drop since March 2020 amid fears over the COVID-19 variant. The plunge in the Treasury yields also weighs on the US Dollar Index (DXY), down 0.09% to reach near 96.68 by the time of writing.
Notably, the woes surrounding the COVID-19 strain do not allow equities to benefit from the softer yields and receding chatters over the Fed rate hike. With the United States traders returning from the Thanksgiving Day holiday, although for a brief session, it is clear that the risk-off mood might get some more boost.
The boost might propel the prices of gold to break above the $1,800 hurdle sustainably. Nevertheless, the Fed policymakers are yet to step back from the rate hike calls, neither did the inflation numbers. In that context, the gold buyers will require a huge push to cross the nearest resistance.
