GOLD OUTLOOK: XAU/USD PRICE EXTENDS RALLY WITH REAL YIELDS UNDER PRESSUREGold worth motion popped one other 1% on Wednesday as actual yields slid
GOLD OUTLOOK: XAU/USD PRICE EXTENDS RALLY WITH REAL YIELDS UNDER PRESSURE
- Gold worth motion popped one other 1% on Wednesday as actual yields slid additional
- A considerably softer US Greenback may be serving to propel XAU/USD larger
- The valuable metallic may give up current good points if Treasury yields rebound
Gold worth motion has superior for eight out of the final ten buying and selling periods. XAU/USD is now up 3.2% month-to-date following Wednesday’s 1% rally towards the $1,830-price stage. Gold costs appear to be gaining floor with actual yields again in free-fall mode. Actually, the actual yield on ten-year US Treasuries simply dropped to its lowest stage since 12 February at -0.97%.
US Greenback bears fading yesterday’s inflow of energy following red-hot inflation information might be placing upward stress on gold costs as properly. To not point out, throughout his congressional testimony earlier right now, Fed Chair Powell warned in opposition to performing prematurely to curb current inflation. Protecting rates of interest low whereas wanting via rising inflation is a bullish setting for gold as this stands to maintain actual yields suppressed.
GOLD PRICE CHART WITH TEN-YEAR TREASURY REAL YIELD OVERLAID
I talk about this and the potential for gold and silver worth motion to get better from June’s nasty -7% selloff in my Q3 prime commerce thought. Particularly, I feel the percentages are appreciable that Fed officers proceed wanting inflation and delaying the taper timeline. This may correspond with an unwind of Fed price hike bets, which might doubtless gasoline gold costs larger as actual yields are dragged decrease in response.
That stated, the pullback in Treasury yields does appear barely overdone. A rebound larger in yields thus poses a possible headwind for gold. From a technical perspective, gold worth motion additionally faces confluent resistance across the $1,835-level. This technical impediment is highlighted by the 50-day easy transferring common, higher Bollinger Band, and 38.2% Fibonacci retracement of the August 2020 to March 2021 buying and selling vary. These technical limitations may hold a lid on upward momentum, however one other leg decrease in actual yields might catalyze a topside breakout towards the $1,900-handle.
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— Written by Wealthy Dvorak, Analyst for DailyFX.com
Join with @RichDvorakFX on Twitter for real-time market perception
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