Nov 26, 2021 01:55AM ET
By: AnalysisWatch
Gold (XAU/USD) marks a new daily high with a 0.55% rise to $1,799 at the start of Friday's European session, its strongest rise in a week. The yellow metal benefits from the decline in US government bond yields, continuing the previous day's recovery moves, mainly due to the problems of the COVID variety.
However, the coupon on the 10-year bond fell the most since July, and the two-year bond saw its sharpest decline since March 2020 on concerns over the COVID-19 variant. The fall in Treasury yields also weighed on the US dollar index (DXY), which was down 0.09% at 96.68 at press time. It is worth noting that worries about the coronavirus strain are not allowing equities to benefit from lower yields and fading talk of a Fed rate hike.
With US traders returning from the Thanksgiving holiday, if only for a short while, risk-off sentiment could get an extra boost, which in turn could push gold towards the $1,800 hurdle. However, Fed policymakers have not yet backed away from the call for a rate hike, and inflation figures have not changed either. As a result, gold buyers will need a stronger impulse to break through immediate resistance.
The Technical Confluences Detector shows that gold remains firm above critical support around $1,790, the intersection of the daily SMA50, the daily Fibonacci 61.8% and the previous low at the four-hour line. However, the bulls need to overcome resistance at $1,800 to regain control. The upper Bollinger Band on the one-hour chart, the Fibonacci 23.6% on the one-month chart, and the previous highs on the 15-minute and one-hour charts are all identical.