The bearish sentiment surrounding the greenback continues to offer support to the precious metal
Gold prices are holding the higher ground on Friday, reaching three-month highs of $1822 in recent trading. The bullion is up nearly 3% so far this week and could register the best week in six months. The bearish sentiment surrounding the greenback and Treasury yields continue to offer support to the precious metal. The 10-year Treasury note yield was lower at around 1.57%, while the U.S. dollar was off 0.4%.
The main catalyst behind gold’s recent surge was the dovish Federal Reserve expectations. Traders continue to believe that the central bank will continue with its accommodative monetary policy stance, despite the strengthening economic recovery. Against this backdrop, the dollar came under pressure following recent gains. As a reminder, the Fed plans to keep borrowing costs near 0% and maintain monthly asset purchases worth $120 billion until it sees substantial further progress towards full employment and its 2% flexible inflation target.
First-time claims for unemployment insurance in the United States totaled 498,000 last week, hitting a fresh pandemic-era low. Now, investors await jobs report to assess the pace of the labor-market recovery. Economists expect one million payrolls to have been added last month. If so, the dollar could rally across the board later today and thus put pressure on the yellow metal. Meanwhile, disappointing figures would back the central bank’s dovish approach, fulling further upside in the bullion.
Now, when the price of gold finally raced past the $1,800 psychological level, it could now target the $1,830 area. If the pressure reemerges in the short term, the $1800 mark could protect the downside. Meanwhile, the daily RSI is pointing north but is yet to enter the overbought territory, suggesting there is scope for further gains at this stage. On the downside, the immediate support is represented by the $1,815 area, followed by the $1,800 psychological level.
