Gold price continues to decline and has touched $1830, its lowest level since the start of this year! After the US retail sales data, the US 10-year bond yield has reached 3.8% after an increase of almost 1%.
As a result of upbeat US data, the bond yields are high, and the US Dollar has also gained additional strength. Both of these factors are weighing heavily on the XAU/USD and have made it touch the $1830 level.
According to experts, the next target for the XAU/USD bears is now the $1838 support zone. But to reach that, the Gold will have to close below yesterday's low first.
Any further decline below $1838 means the next support at $1825 (5 January low) will become the target for the bears. However, it could also mean a new foothold for the bulls, and we could see some buying around that level as well!
If we look at the 14-period RSI on the XAU/USD daily chart, it is still printing below the 50 mid-level. That's yet another sign that the current momentum in Gold is bearish at best.
For the bulls to show commitment, it has become important to capture the 50 SMA on the daily chart. If this happens, then the Gold bulls will rally toward the resistance at the $1870 zone. Any further upside near that level means the next target for the bulls will be $1890 (9th February high).
But for now, there is enough demand for the US Dollar and it seems to be in recovery mode across the FX market. And this broad-market strength is not a good sign for the yellow gold bulls.
Looking ahead, some significant data release from the USA is due that could provide fresh impetus on how the economy is performing.
However, if we move towards the longer timeframe charts of the XAU/USD and look at multi-year trends, it becomes clear that Gold has the upper hand against the USD.