(Kitco News) – Spot gold’s break above $2604 could drive prices toward $2,653 in the near term, before targeting retracement zones between $2,663 and $2,693, according to analyst James Hyerczyk at FX Empire.
Gold prices are recovering in Monday’s trading following a six-session slide as the dollar weakens, but Hyerczyk noted that rising Treasury yields are continuing to cap any significant upside momentum.
“The rebound comes as the U.S. dollar stalls below its recent one-year high, making gold more attractive for non-dollar holders,” he said.
Hyerczyk said that the resistance at $2604.39 is “a critical technical level” that is being closely watched by traders. “A sustained break above this level could generate momentum, pushing prices toward the 50-day moving average at $2653.63 and the retracement zone between $2663.51 and $2693.40,” he said. “However, if new sellers emerge at these higher levels, it could signal continued pressure on gold.”
On the other hand, Hyerczyk wrote that a break below $2,536.85 would suggest weakness and the potential for a sharper decline toward the $2,403.46 200-day moving average.
“Gold’s recovery is partly driven by a pause in the U.S. dollar’s rally, following last week’s 1.6% gain,” he noted. “The dollar index remains elevated after a strong performance in October, fueled by expectations that the Federal Reserve will scale back its rate cuts.”
“Meanwhile, U.S. Treasury yields are holding steady, with the 10-year note at 4.4316% and the 2-year yield slightly lower at 4.2992%,” Hyerczyk said. “Rising yields continue to limit gold’s upside by increasing the opportunity cost of holding non-yielding assets.”
He added that traders will be very attentive to comments from Federal Reserve officials this week for greater clarity on monetary policy. “Upcoming U.S. economic data, such as housing and manufacturing reports, will also influence gold’s direction,” he said.
As far as the price outlook, Hyerczyk said that near-term hinges on the precious metal’s ability to break above $2604.39. “If this resistance is cleared, the market could target $2653.63 and higher levels,” he said. “Conversely, a dip below $2536.85 would favor a bearish scenario, with further losses likely. Traders should remain alert to moves in the dollar and Treasury yields, as they continue to be pivotal factors for gold prices.”
Spot gold successfully breached $2,604 per ounce shortly after 9 am EST, and after a retest of support at that level five minutes before the North American market open, it has since climbed higher.
Spot gold last traded at $2,609.97 per ounce for a gain of 1.79% on the daily chart.
