GOLD OUTLOOK BRIGHT ONCE RANGE-TRADING ENDS

 GOLD OUTLOOK BRIGHT ONCE RANGE-TRADING ENDS

　　The price of gold (XAU/USD is continuing to trade broadly sideways, as it has since early this month, but both fundamentals and technical analysis suggest that a move to the upside is more likely than a fall once it breaks out from its recent narrow trading range.To get more news about WikiFX, you can visit wikifx.com official website.

　　Looking at the fundamentals first, golds sideways trading is surprising given that the US Dollar basket has been falling since the start of April, reaching its lowest level since March 18. While the risk persists of a panic about inflation as the US economy recovers from the slump caused by the Covid-19 pandemic, yields on US Treasuries have eased from their highs and the Federal Reserve has made clear that it is in no hurry to tighten US monetary policy.

　　That Dollar weakness might have been expected to lift the gold price, while lower yields have reduced the attraction of US Government notes and bonds compared with zero-yielding gold. A catch-up advance is therefore looking overdue.
　　If Treasury yields continue to edge off their highs, and the Dollar continues to weaken, the gold price can be expected to strengthen. Moreover, the gold price chart is looking positive.

As the hourly chart above shows, gold has been trading within the bounds of a symmetrical triangle pattern. Given the metal‘s previous advance, that can be seen as a continuation pattern, with gold’s earlier strength likely to resume once trendline resistance is broken. Moreover, it is already testing that resistance and thats a sign that a break higher could now be close.

　　Note too that the price is not yet overbought, as shown by the 14-day relative strength index in the lower panel above, which is still below the key 70 level. However, there is one note of caution: IG client sentiment data are sending out a contrarian bearish signal at the time of writing.