Gold Hits One-Week High As U.S. Dollar Weakens
Alex Boltyan | May 19, 2022 04:33PM ET
Gold prices gained upward momentum on Thursday after moving sideways over the last few days, as U.S. yields pulled back and the dollar, measured by the DXY, lost more than 1% below 103.00. At the time of writing, spot gold, XAU/USD, trades at $1,842, up 1.4% from its opening price and posting a second straight day of gains.
Concerns about global economic growth are weighing on investors' confidence, favoring gold as a shelter and hedge against inflation. Fed’s monetary tightening, the Ukraine war, and lockdowns in China are the main factors fueling fears of a recession, causing capital to flow into safe-havens.
Against this backdrop, bond yields are pulling back,– which can be considered the opportunity cost of holding gold. The yield on the United States 10-Year note fell to its lowest level in three weeks at 2.774%. From a technical standpoint, XAU/USD's short-term outlook remains from neutral to slightly bullish after the price climbed above the 200-day moving average at the $1838 zone.
The RSI has gained a significant positive slope, although it hovers below its midline, while the MACD suggests growing buying interest. If the upward correction continues, immediate resistance is seen at a broken ascending trendline around $1,850. If this level is broken, the next barriers could be found at the 20- and 100-day moving averages at $1,862 and $1,885, respectively.
On the other hand, the immediate support zone is seen in the $1,810-$1,800 range, followed by the three-month low of $1,786 struck earlier this week.
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