Gold (XAU/USD) broke through the $2000 threshold for the first time on record on Tuesday and is settling around $2025. Lower yields and dollar weakness are set to remain supporting the yellow metal demand, according to FXStreet’s Dhwani Mehta who recommends buying gold on dips.
Key quotes
“There were two key catalysts behind the upsurge in the yellow metal, first being the persistent weakness in the US dollar, as the US Treasury yields sit at record lows. The deadly explosion in Beirut further boosted gold’s haven demand. Falling bond yields remain reflective of the worsening US economic picture amid the continued rise in the coronavirus cases and the ongoing US Congress stalemate over the virus relief package.”
“Buying the dips trading could be well in play as long as the price holds above the bullish 21-hourly Simple Moving Average (HMA), now placed at $2002. A break below the 21-HMA support could call for a drop towards the next support of the upward-sloping 50-HMA at $1985.35.”
“The hourly RSI has once again turned north and flirting with the entrance of the overbought territory, backing the case for dip-buying.”
“The record highs could be retested if the buyers regain control en route the critical $2050 psychological level.”
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