Gold (XAU/USD) extends its bullish momentum into a third straight day on Friday, finally breaking through the $1900 mark, as the yellow metal’s bias has shifted from bearish to bullish technically. Furthermore, the US dollar is dumping amid stimulus hopes which benefit stocks and gold while Trump’s improving health condition also boosts sentiment, FXStreet’s Dhwani Mehta reports.
Key quotes
“The main catalyst behind gold’s rally remains the persistent downward pressure on the safe-haven US dollar, as the stimulus hopes continue to underpin the investors’ sentiment alongside the global stocks. House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin restarted the stimulus talks Thursday after President Donald Trump rejected Pelosi’s $2,4 trillion stimulus offer late Tuesday.”
“Trump’s likely return to the public engagements combined with hopes of a Joe Biden win at the November Presidential election bolsters the market mood, adding to the weight on the greenback. A Biden presidency could imply the likelihood of a large stimulus package.”
“In evidence of increased investor confidence in the bright metal, Gold-backed exchange-traded funds (ETFs) amassed over 1,000 tonnes of bullion in the first nine months of 2020.”
“The technical set up for gold looks interesting, with the price on the verge of confirming a falling wedge breakout should it close Friday above the falling trendline resistance at $1909. At that level, the 21-Daily Moving Average (DMA) also coincides, making it imperative for the bulls to battle it out. Backing the case for the bullish move, the 14-day Relative Strength Index (RSI) has pierced through the midline, currently trading at 50.28.”
“On a bullish breakout, the immediate resistance of 50-DMA at $1939 could test the bulls’ commitment, as gold heads towards the record highs of $2075.”
“The bears could regain control on a failure to validate the pattern, opening floors for a retest of the critical 100-DMA support at $1862.”
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