Gold Price Analysis: XAU/USD could extend recovery with a daily close above $1,720

• XAU/USD stages strong rebound on Tuesday, advances beyond $1,700.
• Next key resistance for gold is located at $1,720.
• Sellers could look to recapture control if gold drops below $1,700.

The XAU/USD pair dropped to its lowest level since early June of 2020 at $1,676 on Monday but reversed its course with the greenback coming under strong selling pressure. As of writing, gold was trading at $1,716, gaining nearly 2% on a daily basis.

Gold technical outlook

The Relative Strength Index (RSI) indicator on the daily chart move above 30 on Tuesday but remains below 50, suggesting that the daily rally is a technical correction of the latest drop. 

On the upside, the initial hurdle is located at $1,720 (Fibonacci 23.6% retracement of the February-March drop, daily high). A daily close above that level could open the door for additional gains toward the next Fibonacci resistance (38.2%) at $1,745 ahead of $1,760 (20-day SMA).

On the other hand, sellers could look to retake the control of gold is the price drops below $1,700 (psychological level) and target $1,680 (March 8 low) afterwards.

Additional levels to watch for