Gold Price Analysis: XAU/USD holds onto modest gains, capped by the $1845 area

• The metal gains but fails to break $1845.
• A pullback in Wall Street and a stabilization of the US dollar limited gold.

Gold is rising modestly on Tuesday, on the back of a weaker US dollar and US yields. It peaked on European hours at $1845 and recently at $1842. It is hovering around $1840, up for the second day in a row.

The yellow metal bottomed at $1833 and quickly rebounded; the move lower took place amid a correction in equity prices in Wall Street that trimmed gains. The US dollar is falling across the board. Over the last hours, it managed to stabilize, but the recovery failed to gain momentum. The DXY stands below 90.50 and is starting to look to the daily low. The US bond market opened after Monday’s holiday. The 10-years yield bottomed at 1.08% and then rebounded to 1.10%.

The reaction to Yellen’s testimony has been limited. She spoke about supporting the economy at times when interest rates at historic lows. Her words offered nothing new to market participants.

From a technical perspective, the short-term bias in gold looks biased to the upside. The XAU/USD faces a strong resistance at $1845 that if broken, could allow for an extension toward $1855/60. On the flip side, if gold drops and consolidates below $1835, it would point to a test of $1830.

Technical levels