Gold is finally catching a bit of a break after much pushing and pulling in the past week, with the precious metal finding some respite as Treasury yields retreat from their recent highs.
The bounce started from overnight trading before gaining further momentum today, with price now pushing back up towards $4,180. The latest pullback in Treasury yields is helping to ease some of the pressure on gold, especially after the relentless surge in yields in earlier in the week. 10-year Treasury yields have retreated to 5.23%, down from multi-decade highs around 5.36%, providing some breathing room for the non-yielding precious metal.
From a technical perspective, there are some encouraging signs for buyers.
Looking at the hourly chart, gold has managed to push back above both its 100-hour (red) and 200-hour (blue) moving averages. This comes after weeks of struggle to break either of the key levels, marking a notable improvement in the near-term outlook.
While there looks to be a plausible break higher to come up for air in the chart above, let’s not get too carried away.
The daily chart continues to underscore the narrative that $4,200 remains a big obstacle for gold, with price action struggling just below that in the past week.
Sure, there might be a short-term base forming closer to $4,110 and also supported by the 78.6 Fib retracement level at around $4,117. However, the broader trend continues to suggest that gold price is still largely lacking any real upside momentum. That especially since we’re seeing price not only hold below $4,200 for now but also below its 100-day moving average (red line) at around $4,259.
For now, the latest bounce is encouraging but hardly enough to suggest that buyers have wrestled back control.
As we look to the final stretch of the week, the near-term picture is looking more constructive at the very least. And that will be helped further if Treasury yields do ease a bit more before the weekend. But unless gold can reclaim $4,200 and producer a sterner test of $4,259, sellers will still have good reason to view any upside as a corrective bounce rather than a meaningful turnaround.
This article was written by Justin Low at investinglive.com.