Gold Extends Bullish Momentum, Eyes $1,900 on USD Weakness
Technical Analysis
Gold prices (XAU/USD) on TradingView extended their bullish momentum on Tuesday, buoyed by a weaker U.S. dollar and renewed inflation concerns. The precious metal broke above the key $1,850 resistance level, reaching a high of $1,863.23.
The daily candlestick chart shows a strong bullish engulfing pattern, indicating a reversal of the recent downtrend. The relative strength index (RSI) has also recovered from oversold levels, suggesting a shift in momentum in favor of buyers.
Fundamental Factors
The U.S. dollar index (DXY), which measures the value of the greenback against a basket of six major currencies, declined on Tuesday. A weaker dollar makes gold less expensive for holders of other currencies, increasing its appeal as a safe-haven asset.
Concerns over rising inflation have also supported gold prices. Recent data from the United States showed a surge in consumer prices, with the consumer price index (CPI) rising by 8.5% year-over-year in March. Persistent inflation could erode the value of fiat currencies, making gold a more attractive store of value.
Outlook
Technical and fundamental factors align in favor of a continued bullish trend in gold prices. The break above $1,850 strengthens the case for a rally towards $1,900. A sustained move above this level could open the door for further gains towards $2,000.
However, investors should be aware of potential risks, including a recovery in the U.S. dollar or a decline in inflation. Nonetheless, the overall outlook for gold remains positive, supported by geopolitical tensions and macroeconomic uncertainties.
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