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Gold stands out with an upswing, trading above $1,850. As FXStreet’s Dhwani Mehta notes, XAU/USD’s bullish potential is intact despite the US dollar’s bounce.

US dollar dynamics and Fed speak in focus for near-term trading impetus

“Gold is benefiting from the risk-averse market conditions, thanks to the renewed worries about coronavirus restrictions in Asia. A major covid outbreak haunts Taiwan and Singapore while India and Japan struggle with rising cases and regional lockdowns.”

“Dovish Fed expectations and concerns over dwindling Chinese economic recovery also keep the bullish undertone intact in gold. Gold investors now look forward to the Fedspeak and dollar dynamics amid a quiet start to the week.”

“Gold prices have confirmed a rectangle breakout on the four-hour chart in early dealing, with additional upside seen towards $1880. However, with the Relative Strength Index (RSI) peeping into the overbought territory, the gold bulls could turn a bit cautious before resuming another leg higher.”

“The immediate downside is likely to be cushioned at the pattern resistance now support at $1844. The mildly bullish 21-simple moving average (SMA) at $1831 could be the next significant cap.”

 

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