Gold Consolidates Then Surges to About $2,276The recent decline in gold below $2,260 was a result of profit-taking, following its surge to a new all-time high near $2,280. Adding to this, investors showed reluctance in betting on an extended rally in XAU/USD, owing to the rising US Treasury bond yields. Despite this, the bullish trend for XAU/USD remains firm as per the daily chart, with the pair consistently advancing beyond bullish moving averages. The Relative Strength Index (RSI) indicator also stands in overbought territory at 80.51, further reflecting the upward strength.
Gold offers a similar picture, as the bright metal extends gains well beyond bullish moving averages, reflecting the prevalent uptrend. Furthermore, the widening distance between the price and the moving averages suggests that the bullish momentum is gaining strength. Technical indicators reinforce the bullish narrative, holding within overbought readings. Despite losing upward strength, the case for a downward extension seems limited as the price holds around $2,260.
On Tuesday, spot gold resumed its advance, resulting in XAU/USD reaching a fresh all-time high of $2,276.90 in the American session. The US dollar pared gains at the beginning of the day and lost some additional ground after Wall Street’s opening, despite generally upbeat United States (US) data and the poor performance of US indexes. The country reported that February Factory Orders were up 1.4%, beating the 1% expected and improving from -3.8% in January. Additionally, according to the US Bureau of Labor Statistics (BLS), the number of job openings on the last business day of February stood at 8.75 million, surpassing the previous 8.74 million, which was downwardly revised from 8.86 million. The headline figure shows that the labor market is still far from cooling as the Federal Reserve (Fed) would like.
Several Fed officials made statements, with Cleveland Federal President Loretta Mester being the only one to refer to monetary policy. Mester was cautious, stating that although she still expects the Fed to cut rates later this year, moving rates down too soon or too quickly would risk the progress made on inflation.
Wall Street is under strong selling pressure as government bond yields soar. Today, the yield on the 10-year Treasury note peaked at 4.40%, its highest since last December, while the 2-year note offers 4.70%, not far below the year peak.
With a Bullish Relative Strength Index (RSI) of 80.42 indicating an overbought situation for Gold, it could lead to a further surge to a new resistance level of 2,350, or slide down to finding new support.
