XAU/USD falls from 2-month highs near $1,748 as yields pause with correction

  • Gold is up for the second day in a row, heading for its highest close in two months.
  • The dollar was broadly mixed as stock prices rallied.

To update: Gold prices are trading little changed around 1,843 on the day as it moderates its advance from fresh two-month highs of $1,848. The recent fall in gold prices could be linked to a tepid rise in US Treasury yields, helping to set a fresh bid under the dollar. In addition, a broad recovery in markets fuels risk-on flows and weakens gold’s appeal as a safe haven.

Despite the pullback, the bright metal continues to be supported by rising global inflation and negative real yields. Meanwhile, escalating geopolitical tensions surround the US, Russia and Ukraine amid a likely Kremlin invasion of the latter. More recently, sentiment-driven Fed yields and inflation concerns remain the underlying theme that will remain key going forward.

Read: Gold Price Prediction: Bulls expect a retest of November high 1877.15

Gold broke to the upside after US economic data, peaking at $1847 during the US session, its highest in almost two months. It has a bullish tone but is showing difficulty to sustain above $1845.

Metals are up for the second straight day. XAG/USD is up 1.78% to $24.58, its highest since November 22. Gold and silver have broken relevant short-term technical levels further fueling the upside.

Another factor helping the metals is the fall in US yields from the recent peak along with Wall Street’s rally on Thursday. The Dow Jones gains 0.83% and the Nasdaq 1.47%.

Economic data in the US was mixed. Initial jobless claims rose to 286,000, the highest in three months and well above expectations. On the positive side, the Philly Fed Index rose to 23.2 from 15.4 in December. The latest Existing Home Sales report came in at 6.18 million (annual rate) below the market consensus of 6.44.

to see levels

The technical bias continues to point up after breaking the $1830 area on Wednesday. Now XAU/USD is facing resistance in the $1845/50 area. Upper resistance levels are seen at $1855 followed by $1864.

A pullback below $1,830 should erase the bullish bias and favor further losses, targeting first $1,820 and then $1,810.

Technical Levels

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