Gold Reaches 9-Year High in One Fell Swoop

Gold Reaches 9-Year High in One Fell Swoop

Gold (XAU/USD) appears to have entered a consolidation phase around the $1,850 region after yesterday’s unprecedented bullish performance.

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.

XAUUSD – Hourly Chart

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.

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