Article by: ETO Markets
Middle East geopolitical problems don't seem to be going away, which is said to be one of the main reasons why safe-haven precious metal is doing well. Further supporting the non-yielding yellow metal is the assumption that major central banks may lower interest rates this year.
However, bulls are relatively unfazed by robust follow-through purchases of the US dollar, supported by anticipations that the Federal Reserve may maintain higher interest rates for an extended period of time, which tends to erode the price of gold, which never yields. Although overbought conditions may limit gains, even a generally upbeat tone surrounding the equity markets does little to impede the current advance. This suggests that the path of least resistance for the XAU/USD is to the higher.
From a technical perspective, the strong positive momentum remains uninterrupted despite the extremely overbought Relative Strength Index on the daily chart. Bulls, however, might opt to take some profits near the $… mark heading into the weekend, warranting some caution before positioning for any further appreciating move. Any meaningful corrective slide below $… area, however, is likely to find decent support near the $… region. Some follow-through selling could expose the next relevant support near the $… before the gold price eventually drops to the $… neighbourhood, or the weekly low.
