Analysis: Gold (XAU/USD)

*Previous Trading Session*

• On Thursday, gold strengthened on a weak dollar and made highs of 2046, as the US GDP data announced. 

• However, the prices could not breach the upper trend line of the ascending triangle pattern and ended the day at 2039.17.

*Current Situation*

• Gold extended Thursday’s strength witnessed in gold prices and gold retested the upper trend line of the ascending triangle pattern as the day began on Friday.

• By the mid-Asian session, the gold gave a breakout above the upper trend line of the ascending triangle pattern and made highs of 2055.00

• Gold currently correcting from intraday highs, but seems to be sustained above the upper trend line of the ascending triangle pattern – signaling further bullishness.

• Currently XAU/USD is hovering near 2047.50

*Analysis*

• The gold seems to be driven by the weakness in the 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 the Euro Zone raises the probability of further rate hikes, which has negatively impacted dollar prices.

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

*Technical Indicators:*

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

• Gold on Friday 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 152 levels.

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

*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 the intraday highs of 2055 will drag prices till 2058.68. Above 2058.68, gold price to resume its journey higher toward the crucial 2072 level.

• Support: To begin a declining trend, gold must give a daily closing below 2039.43. Below which the correction mode will begin with the next support at 2029.72

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