Gold Price Forecast: XAU/EUR consolidates around €1,631, as German Bund 10-year yield rises

• XAU/EUR reaches a new year-to-date high at €1,634.04.
• Demand for gold increases as global inflation rises, and investors turn to the yellow metal as a hedge.
• XAU/EUR: RSi in overbought conditions suggests a correction towards €1,604 is on the cards.

Gold spot against the euro (XAU/EUR) is steady around the year-to-date high at €1,634.04, edges up some 0.15%, trading at €1,632 during the day at the time of writing. As the week began, the precious metal extended its rally to eight days in a row.

During the Asian session, the precious metal edged lower towards the lows €1,620. However, it found support around the 50-simple moving average (SMA), spiked towards the new 2021 yearly high at €1,634.04, retreating above the 50-hour simple moving average at press time.

In the meantime, the German 10-year Bund yield gains one basis point, though remains negative, at -0.245%, caped the upside move in XAU/EUR.

According to TD analysts in a note to customers, said that “gold prices have managed to break out nonetheless as global markets scour for inflation-hedges.” Further added, that “the breakout in gold has driven the China Smart Money group of funds to add a significant amount of new length in SHFE gold, which highlights a potential avenue for a significant amount of buying interest, considering that Shanghai gold net length remains near multi-year lows.”

XAU/EUR Price Forecast: Technical outlook

Daily chart

The non-yielding metal has an upward bias, as depicted by daily moving averages (DMA’s) below the spot price. At press time is testing the top trendline of Andrew Pitchfork’s indicator. However, the Relative Strength Index (RSI) at 76, in overbought conditions for the last four days, suggests a correction towards November 13, 2020, high at €1,604, might be possible.

In that outcome, and once the RSI exits overbought conditions, a test towards November 9, 2020, high at €1,652, is on the books, but it would find some hurdles on the way north. The first resistance would be €1,634.04. A breach of the latter would expose the top trendline of Pitchfork’s indicator around €1,640-50.