GOLD prices stabilize after a strong sell-off

#XAU/USD#

XAUUSD AND ANALYSIS
- Gold’s backdrop remains positive and may lead to further gains.
- Retail trader positioning is 50/50.

Gold reached a new record high last week but ended the week relatively unchanged after a sharp sell-off. The Federal Reserve hinted at a potential rate cut of 75 basis points this year, which initially boosted gold. However, the US dollar strengthened towards the end of the week, putting pressure on gold prices.

While the USD strengthened, US bond yields declined in expectation of a lower Fed Fund rate. The rate-sensitive US 2 year decreased by about 14 basis points, while the benchmark US 10 year dropped by 11 basis points last week. Although a temporarily stronger US dollar may limit gold's upward potential, lower US bond yields could potentially drive prices higher and retest last Thursday's all-time high.

After completing a bullish pennant pattern last week, the daily gold chart is now looking to build another bullish set-up. The current sideways price action may turn into a bullish flag pattern, and this would likely see gold pushback above $2,200/oz. and test the ATH at just under $2,225/oz. Reasonable first-line support seen a fraction under $2,150/oz.