The yellow metal effectively capitalized on its recent bullish momentum and continued on its gaining spree for the fourth consecutive trading session. The strong move to its 9-year high point was supported by worries that the second wave of the virus infections in the US could stall the economic recovery.
This comes at a time when the US economy has entered a stalemate over the next round of economic stimulus, which has forced the US dollar bulls into a defensive position and has further boosted the appeal for the dollar-denominated commodity. The Democrats and Republicans have been tussling for a while now over a $3 trillion relief bill.
Regardless, hopes for a more fiscal stimulus continued to underpin demand for the non-yielding commodity.
Meanwhile, the recent risk-on mood in the equities market following the latest optimism over a potential Covid-19 vaccine, caused gold bulls to take a pause amid fresh overbought conditions in the near-term.
Gold (XAU) Value Forecast — July 22
XAU/USD Major Bias: Bullish
Supply Levels: $1,855, $1,863, and $1,880
Demand Levels: $1,840, $1,827, and $1,818
Gold has outperformed our projections in yesterday’s session as it effortlessly snapped several resistance levels to record a 9-year high of $1,865. This surge was largely due to several fundamental factors as pointed out above.
Meanwhile, we are now in an ‘open playground’ and further upside appears more attainable at this point. The path upwards is currently the ‘path of least resistance, ’ which means we are likely to print fresh multi-year highs in the near-term.
However, gold is now fully in overbought territory and a modest dip from this level is imminent. The yellow metal is likely going to be met with strong dip-buying at $1,840 (if it gets to that level), which could send it higher in the near-term.
Note: Learn2.trade is not a financial advisor. Do your research before investing your funds in any financial asset or presented product or event. We are not responsible for your investing results
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