- Spot gold is currently probing multi-month highs at $1870.
- The precious metal will take its cue mostly from Fed-related developments this week.
Spot gold (XAU/USD) is higher this morning and trading above $1865 as it continues to trade with a bullish bias. The dip under $1860 during Monday’s Asia Pacific trading hours attracted good demand. Spot prices have been flirting with multi-month highs at $1870 printed last week, as gold continues to benefit from bullish bank commentary, with Goldman Sachs the latest to forecast the precious metal moving back to the $2000 level. Technically speaking, the picture for gold looks bullish. If the precious metal can break above resistance at $1870, its next move will likely be towards $1900.
-637725793476088440.png)
Real Yields
Real yields across developed markets remain close to record lows, with the US 10-year TIPS currently around -1.17% and the German inflation-linked 10-year yield currently under -2.0%. The fact that real yields are so low (and financial conditions thus so accommodative) despite the recent acceleration of headline inflation rates across developed markets has resulted in central banks like the Fed and ECB facing criticism for being too dovish. In other words, letting inflation run out of control and keeping interest rates low anyway, thus pushing real yields excessively low. Whether or not central banks are making a dovish policy mistake, gold is a big beneficiary, as lower real yields reduce the opportunity cost of holding gold. US real yields are on Monday trading with a slight downside bias, which helped the spot metal off earlier lows.
Ahead
Ahead, the main themes for precious metals like gold this week are all Fed-related; US President Joe Biden’s decision on who will be nominated as the next Fed Chair may be announced and large number of Fed policymakers will be speaking publically. Markets will be attuned to any change in tone on inflation after last week’s upside Consumer Price Inflation (CPI) surprise. Any hawkish vibes from FOMC members might present a challenge for spot gold prices.
Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer. Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.
Recommended content
Editors’ Picks
EUR/USD clings to gains near 1.1100 as USD struggles to rebound
EUR/USD builds on Thursday's gains and trades in positive territory near 1.1100 in the American session on Friday. The US Dollar struggles to hold its ground despite the upbeat consumer sentiment data for September, allowing the pair to stretch higher.
GBP/USD edges higher toward 1.3150 on improving risk mood
GBP/USD edges higher toward the 1.3150 area in the second half of the day on Friday. The improving risk mood, as reflected by rising US stock indexes, makes it difficult for the USD to find demand and supports the pair heading into the weekend.
Gold climbs to new record-high above $2,580
Gold preserves its bullish momentum and trades near $2,580 after setting a new record-high slightly above this level. The 10-year US Treasury bond yield stays in the red below 3.7% as markets reassess the odds of a large Fed rate cut, helping XAU/USD push higher.
Crypto Today: WazirX exploiter moves nearly $12 million Ether to new address, Bitcoin, ETH post gains
Bitcoin trades above $58,000 at the time of writing, adding 2% to its value this week. Ethereum hovers around $2,300 as WazirX exchange exploiter moves 5,000 Ether to a new wallet address and a crypto mixer.
European Central Bank widely expected to cut interest rates in September
The European Central Bank is expected to cut key rates by 25 bps at the September policy meeting. ECB President Christine Lagarde’s presser and updated economic forecasts will be closely scrutinized for fresh policy cues.
Moneta Markets review 2024: All you need to know
VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.