The bullion manages to hold above the 20-DMA, suggesting downside risks are limited in the short term
Gold prices keep trading within a limited range these days, struggling for direction despite a stronger dollar. Following modest gains seen on Wednesday, the precious metal turned slightly negative in recent trading. Still, the bullion manages to hold above the 20-DMA, suggesting downside risks are limited in the short term.
On the upside, the bullish potential is capped by last week’s highs around $1,755, with the prices struggling to get back above the $1,750 area these days. At that, the daily RSI looks directionless in the neutral territory, which implies that the current consolidation could continue for some time before the prices decide on the further direction.
In a wider picture, the fact that the Federal Reserve keeps indicating it will continue its accommodative policies, is broadly supportive for the yellow metal, in addition to some signs of rising Indian imports. Also, rising inflationary pressure would benefit gold by weighing on the US dollar.
Nevertheless, for the time being, the USD index stays elevated, trading around fresh 2021 peaks in the 92.70 region on Thursday, as prospects of a stronger dollar remain underpinned by the outperformance of the US economy as compared to its global peers. Furthermore, yields of the US 10-year Treasuries keep navigating above the 1.60% level, adding to the upbeat ton surrounding the greenback.
Against this backdrop, gold prices will likely continue to lack upside momentum despite the current relatively steady dynamics. A break below the mentioned moving average, today at $1,724, would pave the way towards last week’s lows registered just below the $1,720 handle. If this support gives up, the $1,700 figure will come back into market focus. The XAUUSD pair was last seen trading at $1,732, just below the flat-line. The immediate upside target arrives in the $1,740 area.