Gold Moves Higher As Treasury Yields Pull Back

Key Insights

• Lower Treasury yields provided material support to gold. 
• The dynamics of Treasury yields and U.S. dollar will remain the key catalysts for gold today. 
• A successful test of the $1915 level will push gold towards the resistance at $1935.

Gold Tries To Settle Back In The $1915 – $1935 Range

Gold managed to get back above the $1915 level and is trying to gain additional upside momentum as Treasury yields pull back from their recent highs.

Yesterday, the yield of 2-year Treasuries made an attempt to settle above the 2.45% level but lost momentum and pulled back towards 2.35%. It should be noted that Treasury yields have moved from the 1.30% level at the start of this month to the 2.45% level, so a pullback looks healthy after a huge move.

For gold, lower yields provide an opportunity to gain some upside momentum. The current weakness of the U.S. dollar serves as an additional positive catalyst for gold.

Traders will also continue to monitor the developments on the geopolitical front. The recent negotiations between Russia and Ukraine boosted hopes for a peace deal, but the situation remains uncertain. Any setback will increase demand for safe-haven assets, which will be bullish for gold.

It should be noted that VanEck Gold Miners ETF has managed to return above the $38 level during yesterday’s trading session, so demand for gold mining stocks stays strong. In case gold manages to stay above the $1915 level, GDX will have a good chance to continue the upside move.

Technical Analysis

Gold is currently trying to settle back above the $1915 level. In case this attempt is successful, it will move towards the next resistance level, which is located at the 20 EMA at $1935.

A move above the 20 EMA will push gold towards the resistance at $1950. If gold gets above this level, it will head towards the resistance level at $1965.

On the support side, a move below $1915 will lead to the test of the support at the 50 EMA at $1905. In case gold manages to settle below this level, it will head towards the next support at $1880. A successful test of the support at $1880 will open the way to the test of the next support at $1865.

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