Gold price has pulled back from the gains recorded earlier on Monday as a reaction to the US dollar recouping its earlier losses. After hitting an intraday low of $96.07, the dollar index is currently at $96.22.
Similar to other precious metals, gold tends to have an inverse correlation with the value of the greenback. Since the beginning of December, the support zone at $96 has been a steady one. For as long as the dollar index continues to trade above the aforementioned level, gold price’s upward potential will likely remain curbed.
At the same time, gold price is finding support in the declining US bond yields. The benchmark 10-year Treasury yields are currently at 1.49%. On Thursday, it rose slightly above the psychologically crucial level of 1.50% before pulling back. Notably, that has been a steady resistance zone for two weeks now. A decline in Treasury yields usually lowers the opportunity cost of holding the non-yielding bullion.
Gold price prediction
Gold price has pulled back after beginning the week in the green. It hit an intraday high of 1,812.23 early on Monday before erasing the day’s gains. At the time of writing, the precious metal was down by 0.13% at 1,806.03.
Notably, it has been trading above the psychologically crucial level of 1,800 since mid-last week. On a four-hour chart, it is trading above the 25 and 50-day exponential moving averages. It has also remained above the long-term 200-day EMA for the third session in a row.
In the short term, gold price will likely trade within a rather tight range. From this perspective, the horizontal channel’s lower and upper borders will probably be along the 25-day EMA at the psychological level of 1,800 and the resistance zone of 1,815.45 respectively.
A decline past the range’s lower border will likely place the support level along the 50-day EMA at 1,795.78. Notably, the 200 and 50-day EMAs have converged along the aforementioned support zone.
Subsequently, the occurrence of the bullish golden cross, which means that the 50-day EMA has moved above the 500-day EMA, will signal further gains. In that case, the bulls may have an opportunity to push gold price to the resistance level at 1,825.
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