Gold Price Analysis: XAU/USD extends daily rally beyond $1,940

• XAU/USD is up more than 2% on Monday.
• Technical breakout seems to have attracted gold bulls.
• Correction could be on the cards before further upside.

The XAU/USD pair opened sharply higher on the first day of 2021 and preserved its bullish momentum with the technical breakout attracting more buyers. As of writing, the pair was up 2.45% on a daily basis at $1,940.

XAU/USD technical outlook

Gold seems to have broken above the ascending triangle that formed in December. Additionally, the price rose above the critical 100-day SMA as well, confirming the bullish momentum. However, with the latest upsurge, the Relative Strength Index (RSI) indicator on the same chart reached the overbought territory for the first time since August 2020, suggesting that there could be a technical correction before the next leg up.

On the upside, $1,965 (November 9, 2020, high) aligns as the next target ahead of $2,000 (psychological level). Supports, on the other hand, could be seen at $1,900 (psychological level/former triangle resistance), $1,893 (100-day SMA) and $1,888 (ascending trend line).

Gold daily chart