Gold trades near $4,360 an ounce on Friday after gaining almost 2% in the previous session, supported by falling oil prices and retreating Treasury yields. Technical charts point to a short-term pullback toward $4,215.
Gold is trading near $4,360 per ounce on Friday, building on a rally that saw the metal gain almost 2% in the previous session. The move higher comes as falling oil prices ease inflation concerns and pull bond yields lower.
Falling Oil and Yields Support the Metal
Oil prices have declined for a third consecutive session as Saudi Arabia works to restore supplies through the East-West pipeline. Markets are also watching Donald Trump's meeting with Gulf leaders scheduled for next week.
US Treasury yields have retreated from multi-year highs as well. The 10-year yield fell to 4.93% after briefly moving above 5% earlier this week.
Fed Tightening Still Caps the Upside
Investors continue to assess the outlook for Federal Reserve policy following its first interest rate increase in three years. The Fed has signalled that further tightening may be necessary to bring inflation under control.
Markets currently price the odds of another rate increase as early as October at around 53%. This remains a risk factor for gold, even as lower oil prices and falling yields provide temporary support.
XAU/USD Technical Outlook
On the H4 chart, gold formed a consolidation range around 4,304 before completing a downward move toward 4,234 and a rebound toward 4,381. A new downward move is now developing toward 4,333, with a break below that level opening the way toward 4,215. The MACD indicator supports continued short-term downward momentum, with its signal line below zero and pointing lower.
The H1 chart shows gold breaking above 4,305, rising to 4,335, then pulling back to retest 4,305 from above before consolidating and breaking higher toward 4,381. The Stochastic oscillator backs the bearish scenario, with its signal line above 80 and poised to turn lower toward 20 in the short term.
Source: ActionForex
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