- Gold defends gains amid tepid risk sentiment, dollar strength.
- Technical set up on a daily chart favors the XAU bulls.
- Focus on US data and sentiment on global stocks.
Gold prices (XAU/USD) are reversing a temporary pullback seen on Thursday after the rates reached a new weekly high at 1744.75.
At the press time, gold trades around 1730 levels, posting small gains, as it looks to extend the bounce from daily lows of 1722.44.
The bulls are likely to remain in control so long the price holds above the 21-day Simple Moving Average (DMA), which is now placed at 1723.85.
The yellow metal confirmed a falling channel breakout on the daily chart last Wednesday, following a daily closing above the falling trendline resistance at 1731.63. The upside break got further credence after the price pierced the 21-DMA from below for the first time in six days.
At the moment, gold bulls are struggling around the 1730 mark, but the outlook over the coming weeks still remains constructive, with the pattern target of 1825. However, the seven-year highs at 1765.38 will be a crucial level to beat for the bulls en route the 1800 level.
The daily Relative Strength Index (RSI) points higher above the midline, now standing at 54.36. Therefore, the safe-haven has significant scope for further upside.
Alternatively, a daily closing below the 21-DMA would prompt the sellers to return in the near-term, with a correction towards 1700 not ruled out. The next support is aligned at the upward sloping 50-DMA at 1709.
All in all, the path of least resistance appears to the upside in gold and any pullbacks could likely be a good opportunity for the buyers.
Gold: Daily chart