Gold Price Analysis: XAU/USD soars after breaking above $1850 to the highest in two weeks

• Gold rebound sharply as the US dollar pulls back.
• XAU/USD gains almost 1.45% on Monday, extends rebound from monthly lows.

Gold is shining again after making a sharp daily reversal. XAU/USD is trading at $1865, at the highest level since November 23, after rising more than $40 from the daily low.

The price of the metal accelerated to the upside after breaking above the $1850 area. The move to the upside started as the US dollar weakens across the board. The greenback failed to hold onto gains and retreated sharply.

The US dollar index (DXY) peaked earlier at the 91.20 zone, the highest since Wednesday and it then dropped back to 90.75, the level it closed on Friday. The decline took place even as equity prices trimmed losses but not showing reversals like the USD.

Back above $1850

The break above $1850 in XAU/USD boosted the metal further. It recovered a key horizontal area and also rose above the 20-day moving average, extending the rebound from the $1764 bottom of last week. While above $1850 the momentum will remain strongly bullish. The next resistance stands at $1890.

A decline back below $1850 in gold would alleviate the positive momentum. The next support is seen at $1820 and then at $1800. Below the last one, the recent bottom would be exposed.

Technical levels to watch