Gold price breaks higher, here is the next target on the upside
- Falling U.S. dollar and lower U.S. Treasury yields boosted the gold price today
- Gold price closed over 1.8% higher last week to facilitate a break of $1,760 an ounce short-term resistance
- Yellow metal is now up almost 4% in April, after recording three consecutive red candles on a monthly basis
The Gold price has opened the new week higher to continue moving to the upside on the back of a weaker U.S. dollar and yields.
Fundamental analysis: Gold price rises on a weak dollar and yields drop
The Gold price has moved higher on Monday close to the 7-week high hit in the previous session, as drops in the dollar and U.S. Treasury yields boosted the bullion.
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“At the moment, the combination of a weaker U.S. dollar and easing interest rates is supportive for gold, despite better economic outlook,” said Michael McCarthy, head market strategist at CMC Markets.
“We’ve got the momentum. But of course we are at a very important point having just got through that $1,765 level. While we hold above the $1,765 level, the outlook for gold is positive in the short term,” he added.
On the other hand, the dollar index was trading near its 1-month low, making gold more appealing to investors. The U.S. 10-year Treasury yield was also headed for multi-week lows from last week.
Elsewhere, Asian shares were trading close to 1 and a half week highs on hopes of a continued accommodative monetary policy, helping to maintain an optimistic sentiment in equities.
The U.S. central bank said it plans to retain the accommodative monetary policy until the end of the crisis, adding that any increase in inflation is likely to be temporary.
Technical analysis: A double bottom pattern
The Gold price closed over 1.8% higher last week to facilitate a break of $1,760 an ounce short-term resistance. The yellow metal is now up almost 4% in April, after recording three consecutive red candles on a monthly basis.
A breakout has also activated the double-bottom pattern in gold. The failure to move below $1,680 support created two equal lows on a daily chart with a break of $1,760 an ounce paving the way for traders buying gold to complete the pattern at $1,835 an ounce.
Gold price has ticked higher today, trading near its 7-week high it reached in the last session, supported by a weaker dollar and a drop in the U.S. Treasury Yields. Last week’s breakout has activated the double bottom pattern in gold which could be completed by a move to $1,835 an ounce.
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