Gold staged a show of strength on Wednesday, April 21, trading up to $1,781.50/oz. Despite the rally, gold has been stuck in the $1,771-1,789 range over the past few sessions. A breakout at $1,785 would pave the way for buyers to reach $1,789. Meanwhile, if the interim support at $1,777 is breached, sellers will get the green light to $1,771.
And while sentiment looks fickle, gold sector fundamentals do not appear to play a pivotal role. The key trigger for upside in gold is currently depreciation of the US dollar. Assets are moving in an inverse correlation. The dollar reached a 7-week low against the euro during yesterday’s trading session, is now correcting slightly higher, but still looks lackluster. The decline in UST yields plays out, first and foremost, against the dollar.