- Gold ends week sharply lower; apparently it found support above $1455/oz.
- Outlook points to the downside, but some consolidation could take place after a $50 slide.
- Higher yields, stronger US dollar and risk sentiment, all weight on the metal.
USD rallies as 10-year yield jump toward 2%
Gold opened the week testing the $1515 resistance area but it failed to break higher and made a sharp reversal, losing more than $50 over the week, the worst weekly performance in years. The slide in XAU/USD ended months of range trading with a bearish breakout.
Technical factors favored the acceleration of the decline that was triggered by an improvement in market sentiment. Optimism regarding a trade deal between the US and China boosted risk appetite.
Safe-haven assets were the worst performers of the week, including US bonds. The 10-year yield jumped from below 1.70% to near 2% and also weight on gold. Also a somewhat stronger US dollar that rebound, contributed to the decline in XAU/USD. The DXY bounced from two-month lows near 97.00 and closed the week around 98.40, amid lower rate cut expectation from the Federal Reserve.
Next week
US/China trade headlines will likely continue to have a significant impact on market sentiment. Now with some kind of agreement priced in, the risk over the next few days could be tilted on the opposite direction and could help gold find support or limit the decline. Chinese data is due next week and some economists expect to confirm signs of o moderate recovery that could help risk appetite.
Several FOMC members, including Chairman Powell, are scheduled to make public speeches. Also, here, risk are now tilted in the opposite direction as current market rates point to no rate cut in December.
Technical outlook
The sharp decline in XAU/USD pushed the price below the 20-week simple moving average since May. So far gold managed to hold above $1450 and also it is about to end the week on top of $1460. A consolidation below $1460 would clear the way to more losses, targeting $1440; the next support is seen at $1430.
Short-term oversold conditions could favor some consolidation. Risks are tilted to the downside and XAU/USD still seems vulnerable. A recovery back above $1485 would remove the bearish pressure, hinting at a return to the previous range $1515/1480.
Gold Forecast Poll
The Forex Forecast Poll is a sentiment tool that highlights near- and medium-term price expectations from leading market experts. Currently, a majority of analysts are expecting gold to trade lower next week. On the medium-term, they still see a bullish trend in place but the forecasts have been revised lower.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
EUR/USD holds above 1.0650 after US data
EUR/USD retreats from session highs but manages to hold above 1.0650 in the early American session. Upbeat macroeconomic data releases from the US helps the US Dollar find a foothold and limits the pair's upside.
GBP/USD retreats toward 1.2450 on modest USD rebound
GBP/USD edges lower in the second half of the day and trades at around 1.2450. Better-than-expected Jobless Claims and Philadelphia Fed Manufacturing Index data from the US provides a support to the USD and forces the pair to stay on the back foot.
Gold clings to strong daily gains above $2,380
Gold trades in positive territory above $2,380 on Thursday. Although the benchmark 10-year US Treasury bond yield holds steady following upbeat US data, XAU/USD continues to stretch higher on growing fears over a deepening conflict in the Middle East.
Ripple faces significant correction as former SEC litigator says lawsuit could make it to Supreme Court
Ripple (XRP) price hovers below the key $0.50 level on Thursday after failing at another attempt to break and close above the resistance for the fourth day in a row.
Have we seen the extent of the Fed rate repricing?
Markets have been mostly consolidating recent moves into Thursday. We’ve seen some profit taking on Dollar longs and renewed demand for US equities into the dip. Whether or not this holds up is a completely different story.