GOLD PRICE FORECAST: XAU/USD BREAKS ABOVE $1,800 AS BULLS DRIVE THE BID
- Gold price action explodes 1.7% higher as bulls make a strong push above $1,800/oz
- Silver prices are also gaining ground with the precious metal spiking over 3% today
- Patiently-dovish Fed policy plus rising inflation pose bullish catalysts for gold, silver
Gold and silver prices have put in a strong session so far today as precious metals look to extend their rebounds with conviction. Gold price action popped 1.7% and eclipsed a major technical resistance level around $1,800/oz. Silver, which tends to be more sensitive and volatile than its yellow-metal cousin, jumped 3.5% to trade at its highest level in ten-weeks. This follows the bullish cue I pointed out last week on the back of dovish Fed policy guidance. More recently, FOMC officials have continued to voice adamantly how the central bank will look through transitory rises in inflation and keep benchmark interest rates near zero for the foreseeable future.
GOLD PRICE CHART: WEEKLY TIME FRAME (APRIL 2019 TO MAY 2021)
Chart by @RichDvorakFX created using TradingView
At the same time, real yields have tumbled lower, which looks to be driving the bid beneath precious metals like gold and silver. In fact, the ten-year real yield on US Treasuries has plummeted to -0.88% from -0.56% mid-March. With real yields turning low and precious metals regaining their luster, it seems increasingly likely that gold price action has officially bottomed around $1,680/oz.
| Change in | Longs | Shorts | OI |
| Daily | 5% | -14% | 2% |
| Weekly | 34% | -46% | 10% |
Gold prices now look teed up for continuation higher following the latest move above $1,800/oz. The advance this week appears to have coincided with an acceleration in bullish momentum as highlighted by the MACD indicator and upswing in the relative strength index. This brings channel resistance into focus as a potential topside objective for gold bulls before a bigger breakout toward all-time highs is considered.
-- Written by Rich Dvorak, Analyst for DailyFX.com
Connect with @RichDvorakFX on Twitter for real-time market insight
