XAU/USD – The key factors remain the USD and yields
|XAU/USD, H1
You will notice that the gold price decline is clearly correlated with higher bond yields by the all-time high of the gold price at the beginning of August last year. It was the same period that the US 10-year bond yield was also stuck in the all-time low zone, while another closely related asset to gold was the US dollar. During the volatility of the market in the past year, there were both periods when gold and dollar prices moved in opposite directions and the range moved in the same direction as a safe haven.
Just like last night, following comments from Fed Chair Powell that the 10-year US Treasury yield rose to a new high of 1.582, the US dollar index this morning moved up to a three-month high of 91.73, causing gold to drop to the original low, coming down to trade below the level 1,700.
From a technical point of view, last night the price of gold surpassed 1,700, falling in the same level as the March high zone. That was the beginning of the Covid-19 crisis and the gold price that has continued to fall so far. Still, there are no significant or interesting reversal signs or patterns. And from vaccination, including the new round of US economic stimulus measures one of the hopes of driving gold prices is now an inflationary concern. That began to cause concern in the market at this time but it has to be looked at whether investors will maintain their gold inflation hedge strategy or not. The first support seen at this time is at 1,685 and the next at 1,630, while the resistance is at 1,720 and 1,740, respectively.
On top of today’s economic calendar, there are Non-Farm Payroll figures that forex traders are looking forward to after the non-farm employment figure continues to fall below the market expectations since December onwards.
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