The XAUUSD pair extended gains to the $1,730 area and could now target last week’s highs around $1,745

Gold prices have been creeping higher for the second day in a row on Friday as dollar demand keeps easing amid the retreating yields in the 10-year US Treasuries. The precious metal staged a robust rebound from lows seen below $1,680 earlier in the week, regaining both the $1,700 figure and the 20-DMA, today at $1,722. The XAUUSD pair extended gains to the $1,730 area in recent trading and could now target last week’s highs around $1,745. 

Strong US manufacturing data coupled with Biden’s infrastructure plan boosted global equities ahead of the weekend, sending the safe-haven dollar down nearly across the board. Against this backdrop, the dollar-denominated commodity managed to bounce from multi-month lows and erase losses witnessed earlier in the week.

However, further gains in the yellow metal could be limited. Furthermore, downside risks continue to persist both in the short- and medium-term. Later today, the closely-watched US employment report could push higher bond yields alongside the greenback if the figures surprise to the upside. In this scenario, the bullion may erase recent gains and turn negative on the weekly timeframes.

In a wider picture, gold prices stay on the defensive as long as the futures keep trading below the 20-week moving average that arrives at $1,807. At this stage, a daily and weekly close above the 20-DMA would somehow improve the near-term technical picture. also, the $1.700 figure remains in focus, as the yellow metal could get back below this level easily if dollar demand reemerges.   

As for the USD index itself, the prices stay under pressure following a break below the 93.00 figure, with volatility remaining reduced on Good Friday. The index has been losing ground for the third consecutive session amid a drop in US 10-year yields below 1.70%. the USD index was last seen losing 0.08% on the day, potentially targeting the next support at 92.45.


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