Gold Price Analysis

Gold (XAU/USD) regains upside momentum following its bounce off intraday low even as the buyers struggle around $1,879, down 0.10% intraday, heading into Tuesday‘s European session. In doing so, the commodity prices decline for the second day in a row even as the US dollar and Treasury yields stay pressured. The reason could be traced from mixed Fedspeak and a run-up in the inflation expectations, not to forget cautious sentiment ahead of Friday’s key US data.

US inflation expectations, as measured by the 10-year breakeven inflation rate according to St. Louis Federal Reserve data extends Fridays recovery moves toward the highest since April 2013, marked earlier in the month. While the same suggests upbeat market mood and favors gold prices, fears of inflation pushing the Fed to dial back the easy money weigh on the risk-sentiment and tame the yellow metal buyers.

Contrary to the fundamental strength, gold prices flash mixed signals while looking from the technical perspective.

While a bullish crossover and upbeat MACD conditions pamper gold buyers, a five-week-old rising wedge and Monday‘s ’evening star‘ bearish candlestick probe the quote’s further upside.

Hence, today‘s closing will be important as a downside break of the previous day’s low near $1,872 could negate the price-positive signal by the 50-day and 100-day SMA, which in turn highlights the rising wedge‘s support line close to $1,850 for bears’ entry.

Alternatively, an upper line of the stated wedge near $1,892 guards golds short-term upside and a break of which will help gold bulls to battle $1,900–1901 hurdle comprising mid-November 2020 top and early January 2021 lows.

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