Gold prices have extended gains as declining U.S. Treasury yields and a softer U.S. dollar reduce the opportunity cost of holding non-yielding assets, according to technical and fundamental analysis.
The recent decline in long-dated Treasury yields has been supported by the U.S. Treasury’s expanded buyback program for longer-dated bonds, which increased demand for government securities and contributed to lower yields. This environment has provided a more favorable backdrop for precious metals, while central bank demand and persistent geopolitical and economic uncertainty have further bolstered gold’s appeal. However, the analysis notes that risks remain, including the Federal Reserve’s hawkish stance amid inflation still running above its 2% target. Any renewed rise in Treasury yields or strengthening of the U.S. dollar could temper gold’s upward momentum.
On the technical front, gold has shown a clear recovery, maintaining bullish momentum with prices closing near the upper end of the recent range. The daily chart indicates gold is approaching and testing the 0.62 Fibonacci retracement level, which the analysis identifies as an important resistance area. If gold breaks and closes decisively above this level, the bullish continuation scenario would strengthen, with the next major upside objective at the 0.71 Fibonacci level, around 4,597.
The 4-hour time frame reinforces the bullish structure, marked by a sequence of higher highs and higher lows following a recent impulsive move higher. Two unmitigated Fair Value Gaps (FVGs) at approximately 4,472 and 4,425 are highlighted as potential retracement and support areas, aligning with the 0.50 and 0.62 Fibonacci retracement zones. This confluence increases the relevance of these levels as potential areas for a bullish reaction. The analysis suggests that rather than chasing price at current elevated levels, a retracement into one of these zones could offer a more favorable entry point for a continuation toward the 4,597 target, provided price action shows signs of rejection and bullish confirmation.
Overall, the outlook for gold remains bullish from both fundamental and technical perspectives, though the analysis emphasizes that a sustained breakout above the 0.62 Fibonacci resistance would be required to validate the next leg higher. Failure to hold the identified support zones could see gold consolidate before resuming its upward trajectory.
