- Spot gold consolidating close to monthly highs just under $1820, supported from earlier weekly lows by falling real yields.
- XAU/USD looks on course to post a yearly loss of about 4.0%.
- According to a Reuters poll, investors expect losses of a similar magnitude in 2022.
Spot gold prices are consolidating close to monthly highs just under the $1820 mark, have jumped from earlier weekly lows in the $1790 area after finding support at the 21-day moving average as US real yields slid. Despite a notable improvement in the market’s broader appetite for risk as Omicron-related fears about potential economic disruption and hawkish policy shifts at major central banks including the Fed, ECB and BoE, spot gold is on course to post a healthy monthly gain of about 2.5%, having rebounded more than 3.5% from earlier monthly lows under $1760.
Bond and FX market moves this month have been favourable to precious metals; the 10-year TIPS (real) yield is down roughly 12bps to back under -1.1%, while the DXY is flat on the month just under 96.00, having pulled back sharply from earlier monthly highs closer to 97.00. Recall that gold has an inverse relation to both real yields and the dollar as when the former rises, it raises the opportunity cost of holding non-yields gold and when the latter rises, it raises the cost of dollar-denominated gold for international investors.
On the final day of the year, XAU/USD looks on course to post a yearly loss of about 4.0%, its first annual loss in three. According to analysts at Reuters, the “global economic recovery made its (gold’s) safe-haven appeal less attractive… as central banks prepared to raise interest rates to contain inflation”. According to a Reuters poll released at the end of October which asked investors about their outlook for gold in 2022, the median forecast was for the precious metal to average $1750 throughout the year.
If XAU/USD closed out 2022 at this level, that would mark another roughly 4.0% annual decline. To summarise the thinking of many of the poll’s participants; “gold is unlikely to rise much while investors expect the U.S. Federal Reserve to reduce its asset purchases and raise rates” Reuters said, before quoting an analyst at Phillip Futures as saying that "both (QE taper and rate hikes)… are events that traditionally see gold prices put under pressure”.
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 stays below 1.0800 after upbeat US data
EUR/USD stays under bearish pressure and trades slightly below 1.0800 in the American session on Thursday. The data from the US showed that the real GDP growth for the fourth quarter got revised higher to 3.4% from 3.2%, supporting the USD and weighing on the pair.
GBP/USD stays in daily range above 1.2600
GBP/USD fluctuates in a narrow channel above 1.2600 on Thursday. The better-than-expected Initial Jobless Claims data from the US and the upward revision to the Q4 GDP growth helps the USD stay resilient against its rivals and limits the pair's upside.
Gold clings to strong daily gains above $2,200
Gold retreats from daily highs but holds comfortably above $2,200 in the American session on Friday. The benchmark 10-year US Treasury bond yield stays above 4.2% after upbeat US data and makes it difficult for XAU/USD to preserve its bullish momentum.
XRP price falls to $0.60 support as Ripple ruling doesn’t help Coinbase lawsuit against SEC
XRP programmatic sales ruling by Judge Torres was completely rejected by another US Court that ruled in favor of the SEC in a lawsuit against Coinbase.
Portfolio rebalancing and reflation trades emerge into Q2
Yesterday’s price action pointed at a possible end-of-quarter portfolio rebalancing as the session saw the laggards of the quarter like Apple and Tesla gain, and the stars like Microsoft and Nvidia retreat.