Gold Gains Ground As Treasury Yields Decline

Key Insights

• Gold managed to gain additional upside momentum as Treasury yields moved towards recent lows. 
• At this point, the rebound looks technical, and there is no safe-haven demand for gold. 
• A move above the resistance at $1675 will push gold towards the next resistance level at $1690.

Gold Continues To Rebound

Gold managed to get above the $1660 level and continues to move higher as Treasury yields pull back. The yield of 10-year Treasuries is currently trying to settle below the 3.75% level. In case this attempt is successful, it will move towards the support at 3.65%, which will be bullish for gold.

Meanwhile, the U.S. dollar rebounds after yesterday’s sell-off. Typically, stronger dollar is bearish for gold markets. However, the recent pullback in the dollar was strong, so gold may feel no pressure from stronger dollar if the rebound of the American currency is limited.

In the near term, traders will stay focused on the dynamics of U.S. dollar and Treasury yields. The safe-haven demand for gold is limited despite rising geopolitical tensions.

At this point, it is not clear whether traders will be ready to increase their gold purchases in case global equity markets continue to slide as Treasury yields will likely move higher in this scenario.

Resistance At $1675 In Sight

Gold is currently moving towards the resistance at $1675. RSI is in the moderate territory, so there is plenty of room to gain additional upside momentum in case the right catalysts emerge.

If gold manages to settle above $1675, it will move towards the next resistance level, which is located at $1690. A move above this level will open the way to the test of the resistance at the 50 EMA at $1715. If gold climbs above the 50 EMA, it will head towards the resistance at $1730.

On the support side, the previous resistance at $1660 will serve as the first support level for gold. If gold declines below this level, it will head towards the next support at $1640. A successful test of the support at $1640 will push gold towards the support level at $1620.

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