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Gold Price Forecast: XAU/USD points to further gains as new covid variant sours sentiment

After falling to its lowest level since early November at $1,778 on Wednesday, gold has staged a decisive rebound ahead of the weekend and settled near $1,800. In the view of FXStreet’s Eren Sengezer, XAU/USD looks to extend rebound amid renewed coronavirus fears.

Gold's inverse correlation with US Treasury bond yields stays intact

“Although a better-than-expected increase in Nonfarm Payrolls could provide a boost to the dollar, the market reaction could remain limited unless vaccine producers reassure markets that they will be able to handle the new variant.”

“In case Fed officials refrain from suggesting that they will need to stay patient in the face of renewed coronavirus fears, US T-bond yields could regain traction and cap XAU/USD’s upside. On the other hand, gold could continue to gather strength if safe-haven flows continue to dominate the financial markets.”

“On the upside, $1,815 (Fibonacci 38.2% retracement of the latest uptrend) aligns as first resistance ahead of $1,825 (20-day SMA). In case the latter turns into support, XAU/USD could target $1,840 (Fibonacci 23.6% retracement).”

“The bearish pressure could increase with a daily close below $1,790 (50-day SMA, 100-day SMA, 200-day SMA) and cause gold to fall toward $1,780 (Fibonacci 61.8% retracement), $1,770 (static level).”

 

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