July 28, 2022 16:12:02
Gold continues to ride higher for the second straight day on Thursday. The move was sponsored by the weaker US GDP data and risk aversion in the market.
US GDP declined unexpectedly in Q2 amid high inflation figures, interest rate hikes, and supply-chain concerns. The factors weighed upon consumer sentiment and business activity. The economy shrank by 0.9% following a 1.6% drop in the previous quarter. This is the second-straight negative quarter for GDP.
The data added to the series of economic data pointed to a decline in economic activity that weighs on the US dollar and strengthens the demand for gold.
The benchmark US 10-year treasury yield dropped by 7 basis points to 2.66%. The precious metal holds an inverse relationship with the bond yields.
The US dollar index (DXY) remains pressured below 106.32, down 0.01% for the day. Investors digested the recent FOMC expected rate hike and fresh economic data.
As of publication time, XAU/USD reads at $1,754, up 2.0% for the day.
XAU/USD gains momentum above $1,750
On the daily chart, the gold price strengthens its footing above the psychological $1,750 level. The price has surged 2% from the $1,711 lows made in the previous session. The price gained more traction amid sustained buying pressure.
The underlying bullish sentiment lifted gold to over a two-week high on Thursday.
A bullish piercing pattern made on July 20 formed the foundation for the current price rally. The price registered 4% gains in the past eight days from the lows of $1,680.
In addition to that, the rounded bottom formation also confirms the upside momentum in the yellow metal. The buyers managed to defend the critical support zone of $1,700-$1,710 level.
Now, a daily close above the session’s high will open the gates for the psychological $1,800 level.
The RSI (14) still trades below 40. Any uptick in the indicator would strengthen the bullish outlook.
Strong support is placed near $1,730 for the short term.
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