Gold Price Analysis: XAU/USD stays depressed below $1,800, eyes US Treasury yields
- Gold prices fail to keep the bounce off $1,789.54, remains heavy near two-week low.
- US Treasury yields refresh multi-month high, recall US dollar bulls.
- Risk-on mood gain momentum with the American covid relief package eyed by March 08.
- US Retail Sales, FOMC Minutes will decorate the calendar but risk catalysts remain as the key.
Gold remains on the back foot around $1,795, failing to defy the heaviest losses in two weeks, amid the initial Asian session on Wednesday. The yellow marks the five-day losing streak while keeping the previous day’s bearish move as the US 10-year Treasury yields back the US dollar’s strength and exerts additional downside pressure on the bullion at times when market optimism weighs on safe-havens.
No respite for bears…
The precious metal attacks the monthly low as a jump in the US bond yields, to the levels last seen during February 2020, signal an extra strength for the greenback, which in turn pleases the gold sellers.
Previously, improvement in the coronavirus (COVID-19) conditions and the jump in the covid vaccinations joined hopes of the US virus relief package to favor the bullion sellers. The downside move recently got the US dollar strength as the power fuel to direct the metal towards key supports.
The UK and Israel’s success in jabbing the vaccines gained support from receding virus infections. The US COVID-19 numbers are also declining off-late while the major vaccine producers stay ready to respect their delivery obligations. Even so, some of the Asia-Pacific countries, like Japan, Australia and New Zealand, battle the virus and keep the issue on the table for concern.
Elsewhere, America’s ex-President Donald Trump got acquitted for the Capitol Hill attacks, giving time for Congress to move on the much-awaited stimulus. Recent updates from CNN’s Manu Raju suggest that President Joe Biden’s covid relief plan is likely to be tested on the House floor by end of next week, and the chamber is preparing for final passage week of March 8 if Senate amends it.
Amid these plays, US 10-year Treasury yields grew over 11 basis points to close Tuesday’s North American trading session, the first in the week, at 1.311%. While the moves helped the US dollar index (DXY) to recover from the monthly low, Wall Street closed mixed.
Looking forward, gold traders will keep their eyes on the US Treasury yields for fresh impulse amid a light calendar in Asia. During the American session, the expected recovery in January’s Retail Sales needs support from FOMC minutes to keep the greenback bulls happy, which in turn can favor gold sellers.
Technical analysis
An ascending trend line from November 30, at $1,789 now, precedes the yearly bottom around $1,785 and the late-2020 low near $1,765 to challenge the yellow metal’s short-term downside. On the contrary, January’s low of $1,803 guard’s quote’s immediate upside while the convergence of 21-day SMA and January a six-week-old trend line, around $1,835, becomes the key hurdle.
Author
Anil Panchal
FXStreet
Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.
