Gold Price Forecast: Firmer Bund yields, bearish technicals test XAU/EUR rebound ahead of Eurozone inflation


  • Gold prices in Euro consolidate the biggest fall in five weeks.
  • 32-month high German Bund yields, clear break of €1,590 key level keeps bears hopeful.
  • Euro hawks aim for firmer inflation, US NFP can challenge gold buyers.

Gold (XAU/EUR) prints mild gains around €1,585 as sellers take a breather near a three-week low heading into Friday’s European session.

The latest corrective pullback in gold prices could be linked to the cautious mood ahead of the Eurozone Consumer Price Index (CPI) for December and the US jobs report for the said month. Additionally, escalating covid woes and the US-China tussles, recently over trade and human rights, also favored gold buyers of late.

The bullion prices in Euro dropped the most since November 30 the previous day as the 10-year German Bund yields jumped to the highest since May 2019. Behind the moves could be Germany’s inflation gauge, namely the Harmonized Index of Consumer Prices (HICP), which eased in December while matching downbeat forecasts. On the same line were fears of tighter monetary policies at the European Central Bank (ECB) as Latvian central bank governor and ECB governing council member Martins Kazaks said earlier in the week that the ECB is ready to raise rates and cut stimulus if needed.

On the other hand, the US 10-year Treasury rallied to a nine-month high, retreating to 1.72% of late, while cheering hawkish Fedspeak that justifies Wednesday’s FOMC Minutes. That said, St. Louis Fed President James Bullard pushed for a March rate hike whereas Federal Reserve Bank of San Francisco President and an FOMC member Mary C. Daly marked the need to raise interest rates to keep the economy in balance.

Against this backdrop, the US 10-year Treasury yields consolidate recent gains around a nine-month high while the S&P 500 Futures and EuroStoxx Future print mild gains.

Moving on, Eurozone CPI, expected to ease to 4.7% from 4.9% YoY may allow XAU/EUR bears to retake controls ahead of the US jobs report. Following that, the US jobs report will be important to watch amid hawkish hopes from the Fed, which in turn may weigh on the EUR due to the Fed v/s ECB battle.

Technical analysis

Gold (XAU/EUR) slumped to a three-week low on breaking an upward sloping support line from September and the 50-DMA, around €1,590, the previous day. The downside also gains support from the recently bearish MACD signals.

As a result, the corrective pullback remains elusive until the quote rises back beyond the €1,590 level.

Even if the gold prices in Euro rise beyond the €1,590 hurdle, the 23.6% Fibonacci retracement (Fibo.) of September-November upside, near €1,613, will challenge the commodity buyers.

Meanwhile, gold’s downside towards the 50% Fibo. level of €1,567 becomes imminent while the 100-SMA level of €1,556 can challenge the metal sellers afterward.

Overall, gold prices are likely to portray further downside even as the latest move challenges the bears.

XAU/EUR: Daily chart

Trend: Further weakness expected

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news Join Telegram

Recommended content


Recommended content

Editors’ Picks

EUR/USD clings to strong daily gains, stays below 1.0700

EUR/USD clings to strong daily gains, stays below 1.0700

EUR/USD has gone into a consolidation phase after having climbed to its highest level in nearly a month at 1.0687 in the European session. ECB President Lagarde's hawkish comments and the broad-based selling pressure surrounding the dollar fueled the pair's rally at the beginning of the week.

EUR/USD News

GBP/USD retreats modestly after testing 1.2600

GBP/USD retreats modestly after testing 1.2600

GBP/USD has edged slightly lower after having tested 1.2600 in the European session. With the dollar facing heavy selling pressure in the risk-positive market environment, however, the pair clings to strong daily gains ahead of BOE Governor Bailey's speech.

GBP/USD News

Gold climbs to two-week high at $1,865 amid weaker USD

Gold climbs to two-week high at $1,865 amid weaker USD

Gold capitalizes on the improving market mood and the weakening dollar on Monday, trading at its highest level in two weeks above $1,860. The benchmark 10-year US Treasury bond yield is up more than 1%, limiting XAU/USD's upside for the time being.

Gold News

Cardano whales enter buying spree before the Vasil hard fork

Cardano whales enter buying spree before the Vasil hard fork

Cardano price is showing an interesting set up as it struggles to make a move above a crucial support level. A rejection could lead to a buying opportunity for patient investors before ADA explodes.

Read more

Why is SIGA Technologies stock soaring on Monday?

Why is SIGA Technologies stock soaring on Monday?

SIGA Technologies is soaring again on Monday as the company continues to benefit from the spread of monkeypox throughout the globe. SIGA has a monkeypox vaccine candidate that got FDA approval.

Read more

Forex MAJORS

Cryptocurrencies

Signatures