The metal is supported by several drivers including a weaker dollar
Gold prices rallied to two-month highs on Wednesday, extending gains to the $1,844 area today as the dollar turnednegative amid the retreating Treasury yields. The precious metal was also supported by another sell-off on Wall Street. US stocks erased early gains to finish in the red overnight as investors continued to assess the prospects for the Fed rate hike.
Furthermore, the Russia-Ukraine situation may be adding to the upbeat sentiment in the gold market. In a wider picture, the persisting uncertainty over omicron’s impact on the global economy coupled with rising inflation helped boost the appeal of the safe-haven gold.
The USD index peaked at 95.83 earlier in the week, cheering another jump in US Treasury yields to two-year highs. However, the US currency failed to extend recovery and came under some selling pressure on Wednesday, staying slightly on the defensive today. The index was last seen changing hands around 95.52, up 0.01% on the day.
Should the greenback regain the upside momentum, however, the yellow metal may have to retreat today if the upcoming US economic figures exceed expectations. The weekly jobless claims, Philly Fed manufacturing index, and existing home sales are due later on the day. Should the USD index exceed the 95.60 zone, the prices could retarget the mentioned local highs, followed by the 96.00 barrier last seen more than one week ago.
From the technical point of view, it looks like the XAUUSD pair could shift into consolidation mode in the immediate term, with upside risks persisting as long as the prices stay above the $1,830 zone. Should the bullion retreat below this level, the market focus will shift back to the ascending 20-DMA, currently at $1.814.