Gold Price Analysis: XAU/USD bears eye sub-$1,700 area amid strong yields, US dollar


  • Gold remains pressured near nine-month low, fades bounce off $1,702.
  • Bond bears return amid optimism concerning US stimulus and vaccine power, comments from ECB add to the Treasury yield rally.
  • American covid aid package, Fed’s Powell eyed amid a light calendar in Asia.

Gold fades bounce off the lowest since June 2020, easing to $1,711, during the initial Asian session on Thursday. In doing so, the yellow metal takes clues from the recent jump in the US Treasury yields while respecting cautious sentiment ahead of the week’s key events.

Reflation fears return to the table as stimulus underway…

US Congress is getting closer to support President Joe Biden’s optimistic covid relief package, per the Senate sources, which in turn joins the UK government’s heavy push to aim speedy recovery, via annual budget, and will propel the fund flow. The same reignited reflation fears and pushed US bonds down.

Also on the same line could be comments from the ECB policymakers suggesting no need for drastic monetary policy action to tame the bond frenzy.

Furthermore, downbeat US data and chatters surrounding American ability to vaccinate all the adults in the nation by May, versus previous announced July, also favor the Treasury yields.

Against this backdrop, the US 10-year Treasury yields rose 6.9 basis points to 1.48% whereas the Wall Street benchmarks drop by the end of Wednesday’s North American session. It’s worth mentioning that the US dollar index (DXY) gained fresh life due to the risk-off mood as it teases 91.00 by Wednesday-end following a reversal from a one-month top on Tuesday.

Given the lack of major data/events ahead of the US session, coupled with the higher attention on the US Treasury yields, today’s speech by Fed Chairman Jerome Powell and updates on the US stimulus will be the key drivers to watch ahead of Friday’s American jobs report for February.

Technical analysis

Considering gold’s sustained trading below November 2020 low near $1,765, bears are targeting a falling support line from August, at $1,677 now.

Additional important levels

Overview
Today last price 1711.16
Today Daily Change -22.00
Today Daily Change % -1.27%
Today daily open 1733.16
 
Trends
Daily SMA20 1795.4
Daily SMA50 1839.57
Daily SMA100 1854.61
Daily SMA200 1860.36
 
Levels
Previous Daily High 1738.56
Previous Daily Low 1707.28
Previous Weekly High 1816.07
Previous Weekly Low 1717.24
Previous Monthly High 1871.9
Previous Monthly Low 1717.24
Daily Fibonacci 38.2% 1726.61
Daily Fibonacci 61.8% 1719.23
Daily Pivot Point S1 1714.11
Daily Pivot Point S2 1695.05
Daily Pivot Point S3 1682.83
Daily Pivot Point R1 1745.39
Daily Pivot Point R2 1757.61
Daily Pivot Point R3 1776.67

 

 

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