Gold eyes extending gains above $2,050.00

As of writing, the price of gold has surged by 0.55% to $2,038.16 per ounce. The yield on the 10-year US Treasury note is at its lowest level since July as interest rates continue to decline. The US Core Personal Consumption Expenditures (PCE) Price Index is still the major focus. With room to grow gains above $2,050, the Gold Index (XAU/USD) continues to rise.

Tuesday’s stronger tone in gold trading is aided by the general decline in the US dollar. XAU/USD trades at $2,0403, very close to the peak recorded at $2,047.90 last week. The continuing risk appetite reflected in the upbeat tone of markets undermines demand for the US dollar.

In line with relief from central banks, Wall Street maintains weekly advances, with the Nasdaq Composite setting new records for a third straight session.

Treasury yields continued to decline, which put more pressure on the US dollar. The yield on the 10-year government bond is at 3.90%, the lowest since late July, while the yield on the 2-year note is 4.43%, keeping close to the multi-month low of 4.28% set last week and down 2 basis points (bps) on the day.

The US macroeconomic calendar was not very interesting. The nation revealed November Housing Starts, which increased 14.8% in the same month as Building Permits, which fell 2.5% MoM. The Core Personal Consumption Expenditures (PCE) Price Index, the US Federal Reserve’s (Fed) preferred inflation gauge, is expected to spark speculation when it is issued on Friday.

Technically speaking, the XAU/USD pair’s daily chart keeps the risk tilted higher. A bullish 20 Simple Moving Average (SMA) served as the pair’s intraday retracement point, and the longer moving averages ticked slightly higher while staying well below the shorter one. Simultaneously, technical indicators show slight intraday gains, but the Momentum indicator stays in neutral territory.

Additionally, the Gold Index is positively going forward. A flat 100 SMA provides intraday support on the 4-hour chart, but the 20 SMA rises above the longer one. With the Momentum indicator penetrating its midline and the Relative Strength Index (RSI) signal hovering around 64, technical indicators are finally heading north. Overall, it is anticipated that XAU/USD will rise gradually because there isn’t a catalyst that might cause a positive breakout to occur anytime soon.

Support levels: 2,027.60 2,014.10 2,003.90

Resistance levels: 2,047.90 2,065.60 2,076.10