Gold Is Mostly Flat As Traders Take Profits After Rally

Key Insights

• Gold traders take some profits off the table after the strong rally. 
• Traders will stay focused on the dynamics of the U.S. dollar, which served as the key catalyst for the recent rally. 
• A move above the resistance at $1730 will push gold towards the next resistance level at $1750.

Resistance At $1730 Stays Strong

Gold faced resistance at $1730 and pulled back as the U.S. dollar began to rebound after yesterday’s sell-off.

The U.S. Dollar Index, which measures the strength of the U.S. dollar against a broad basket of currencies, found support near the 110 level and rebounded towards 110.25. In case the U.S. dollar continues to move higher, gold will find itself under more pressure.

Meanwhile, Treasury yields are mostly flat. Yesterday’s disappointing JOLTs Job Openings report had a significant negative impact on the U.S. dollar but did not push Treasury yields to new lows.

Bond traders remain worried about high inflation and potential hawkish moves from the Fed. If Treasury yields rebound, gold will likely move lower.

In the near term, the key question is whether gold and other precious metals will face a wave of profit-taking. The strong rally pushed gold from $1615 to $1730, which was a big move for gold.

It should be noted that there are no signs of a serious sell-off in the precious metals segment. Silver is trading near the $21.00 level. Platinum settled near $940, while palladium continues to trade above $2300.

Gold Is Trading In The $1715 – $1730 Range

Gold has settled in the range between the support at the 50 EMA at $1715 and the resistance at $1730. In case gold gets above the resistance level at $1730, it will move towards the next resistance, which is located at $1750.

A successful test of the resistance at $1750 will push gold towards the $1765 level. If gold manages to settle above this level, it will head towards the next resistance at $1775.

On the support side, gold needs to settle back below the 50 EMA to have a chance to gain downside momentum in the near term. The next support level for gold is located near the 20 EMA at $1690. If gold declines below the 20 EMA, it will head towards the support at $1675.

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