Gold Price Analysis: XAU/USD rises further to fresh multi-year highs above $1840

• Weaker US dollar across the board keeps boosting XAU/USD.
• Despite overbought readings, the yellow metal keeps going north.

Gold extended daily gains and climbed to $1842/oz hitting the highest level since September 2011. As of writing, it is trading near the top, holding onto to a daily gain of almost $25.

The key driver continues to be a weaker US dollar. The greenback is falling sharply across the board with the DXY trading 95.20, down 0.65%, having the worst daily performance in weeks.

In Wall Street, the Dow Jones is testing the 27,000 area, up 1.15% while the Nasdaq corrects lower 0.40%. The improvement in market sentiment follows the agreement between European leaders for the recovery fund and optimism about a COVID-19 vaccine.

Another driver of USD weakens are US yields. The 10-year yields reached levels under 0.60% for the first time since July 10. The dollar is falling against majors, including safe-havens CHF and JPY, but also versus commodity and emerging market currencies.

Technical levels

Short-term technical indicators in XAU/USD point to overbought readings but no sign of a correction are seen at the moment. If the metal continues to rally, a natural resistance is seen at $1850, followed by the $1880 area. On the flip side, the immediate support is located at $1835, and then $1815/20 (July 8, 9 & 20 high).