- 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.
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
AUD/USD posts gain, yet dive below 0.6500 amid Aussie CPI, ahead of US GDP
The Aussie Dollar finished Wednesday’s session with decent gains of 0.15% against the US Dollar, yet it retreated from weekly highs of 0.6529, which it hit after a hotter-than-expected inflation report. As the Asian session begins, the AUD/USD trades around 0.6495.
USD/JPY finds its highest bids since 1990, approaches 156.00
USD/JPY broke into its highest chart territory since June of 1990 on Wednesday, peaking near 155.40 for the first time in 34 years as the Japanese Yen continues to tumble across the broad FX market.
Gold stays firm amid higher US yields as traders await US GDP data
Gold recovers from recent losses, buoyed by market interest despite a stronger US Dollar and higher US Treasury yields. De-escalation of Middle East tensions contributed to increased market stability, denting the appetite for Gold buying.
Ethereum suffers slight pullback, Hong Kong spot ETH ETFs to begin trading on April 30
Ethereum suffered a brief decline on Wednesday afternoon despite increased accumulation from whales. This follows Ethereum restaking protocol Renzo restaked ETH crashing from its 1:1 peg with ETH and increased activities surrounding spot Ethereum ETFs.
Dow Jones Industrial Average hesitates on Wednesday as markets wait for key US data
The DJIA stumbled on Wednesday, falling from recent highs near 38,550.00 as investors ease off of Tuesday’s risk appetite. The index recovered as US data continues to vex financial markets that remain overwhelmingly focused on rate cuts from the US Fed.