XAU/USD’s 4-day rally from $1690 lows has extended on Friday, buoyed by the dismal market sentiment and downbeat macroeconomic data, to reach one-month highs above $1,740, only a handful of pips below $1,747, the highest price since November 2012.
Gold rallies with US dollar losing its footing
The precious metal has been trading higher this week as market fears about the second wave of COVID-19 infections have dampened hopes about a quick economic recovery in the countries that started easing restrictions. Beyond that, the escalating tensions between the US and China have increased aversion to risk, with the investors looking for shelter in safe havens like gold.
On the data front, the negative impact of US retail sales data on the dollar has also been supportive of the XAU/USD. The USD has lost ground across the board after the US Census Bureau reported a record 14,6% decline on retail consumption in April, beating market expectations of a 12,5% drop.
The 4-hour charts show the pair well into overbought territory, after having rallied about 2.7% over the last four days, which suggests that the pair might take a break before confirming above April’s high.
With the Irish off sentiment likely to prevail during the next sessions, as macroeconomic indicators continue illustrating the global impact of the pandemic, the pair could well extend break beyond $1744. Once above here, next targets would be October 2012 highs at $1.796 before attempting to attack September 2011 highs at $1921.
XAU/USD key levels to watch