Gold (XAU/USD) extended its gains for the second consecutive day, trading around $4,610 during European hours on Friday, and maintained a bullish bias by staying above both the nine-period and 50-period Exponential Moving Averages (EMAs) [1]. The 14-day Relative Strength Index (RSI) was reported at approximately 67, indicating continued upside momentum, though the market is approaching stretched conditions without being extremely overbought [1].
The price action suggests that gold could target the three-month high of $4,697.07, last reached on August 25. A break above this level would potentially open the way for a move toward the upper boundary of the ascending channel near $4,850.00 [1]. On the downside, immediate support is seen at the nine-day EMA of $4,557.72, with further support at the lower boundary of the ascending channel around $4,500. If these levels are breached, the next targets would be the 50-day EMA at $4,336.84 and the three-week low of $4,311.04, recorded on August 14 [1].
Deutsche Bank analysts noted a firmer backdrop in rates and commodities, with the 10-year US real yield at 2.34% (up 2 basis points) and 10-year US breakevens at 2.33% (up 1 basis point), while the 10-year German breakeven rose to 2.13% (up 2 basis points) [1]. Credit markets and financial indices remained broadly steady, and equity sentiment in Asia was constructive, with the NIKKEI up 0.74% and the Hang Seng up 0.47% [1]. Volatility, as measured by the VIX, eased further to 14.51 (down 0.70) [1].
Despite the bullish technical setup, Deutsche Bank highlighted that gold came under pressure, with spot gold at $4,579 (down 0.85%), as real yields firmed and oil prices rose (WTI Oil at $83.13, up 1.94%) [1]. The Euro softened slightly against the US dollar, with EUR/USD at 1.165 (down 0.10%) [1].
CONCLUSION
Gold is holding above $4,600 with a bullish technical outlook, but faces headwinds from rising real yields and stronger oil prices. While upside momentum remains, further gains may depend on breaking key resistance levels, and downside risks persist if support levels are breached. Market sentiment is cautiously optimistic, but external macro factors could influence gold's next move.