Gold prices managed to break out of the sideways range of $1,771-1,798 and has been hovering around $1,805 on Tuesday morning. The main upside trigger was local weakness in the dollar. The dollar factor remains pivotal for gold prices, since physical demand for the precious metal is limited, as well as demand derived from industrial applications.
Ideally, gold should stabilize in the range of $1,803-1,805, in order to move up to $1,810 at a later time. That said, interim resistance emerges at $1,808, which will be challenging to breach in one fell swoop.
In terms of fundamentals, gold retains support from the Covid Delta variant as the uptick in new cases of the virus shows no signs of receding, while the likelihood of related complications speeds up investors' flight to safety. Gold hinges on a long-term investment case and this issue can be expected to emerge periodically.
Over the next couple of days, we see subdued trading activity in gold as traders are likely to tread cautiously ahead of the Jackson Hole Symposium.