· Gold Technical Analysis - The $1700/oz psychological area has been breached once again
Gold is still looking pretty heavy at the moment and lower levels are in focus as the bulls continue to remain in charge. There has been a fresh wave of selling pressure as both stocks and fixed income yields rise in the EU session so far.
The next support comes at the previous wave low at $1672.8/oz and this area was very prominent back in April to May 2020. Before that, the area was also a very strong resistance back in March 2020 too and this does help any suggestions that it could be a key area this time around.
The lighter red trendlines are showing the channel has been very well respected too. The lower channel zone could act as a support zone and the price has bounced off the trendline at least three times already. If there is a break below the trendline then it might spell more trouble for the yellow metal.
If this is the case, the next major support zone is at $1587/oz but before that the $1600/oz psychological level is in the way. The volume has not been extremely healthy at the moment and this shows the lack of demand at this current price point. One thing is for sure, the bears are in charge as $1700/oz has been broken again today.
· Gold Price Analysis: XAU/USD slides to three-week lows, below $1700 mark
Gold added to its intraday losses and slipped below the $1700 mark, or three-week lows during the early European session.
The precious metal continued losing ground for the second consecutive session on Tuesday and was pressured by a combination of factors. A generally positive risk tone, sustained US dollar buying and a fresh leg up in the US Treasury bond yields all contributed to the ongoing decline to the lowest level since March 9.
The USD shot to four-month tops and remained well supported by the upbeat outlook for the US economy. Investors remain optimistic about the prospects for a relatively faster US economic recovery from the pandemic amid the impressive pace of coronavirus vaccinations and the passage of a massive stimulus package.
Meanwhile, the reflation trade pushed the yield on the benchmark 10-year US government bond back closer to the 1.75% threshold, or over one-year tops touched earlier this month. This was seen as another factor that benefitted the USD and further contributed to driving flows away from the non-yielding yellow metal.
From a technical perspective, Tuesday's follow-through selling reaffirmed the overnight bearish breakthrough a two-week-old trading range and supports prospects for additional losses. Hence, a subsequent slide towards retesting multi-month lows, around the $1677-76 region, now looks a distinct possibility.
Market participants now look forward to the US economic docket, featuring the release of the Conference Board's Consumer Confidence Index. Apart from this, the US bond yields will influence the USD. Traders might further take cues from the broader market risk sentiment to grab some opportunities around the XAU/USD.
· “Primary weighing factor on gold prices is the continuous rise in the U.S. long-term yields,” said DailyFX strategist Margaret Yang, adding that although gold prices should rise being an inflation hedge, there is a constant decline in prices.
This decline in gold prices, “can be attributed to reflation hopes as this infrastructure plan will not only inject liquidity into the market, it’ll actually pump money into the real economy ... therefore, the economic outlook is brighter than before.”
Longer-dated Treasury yields gained amid expectations that U.S. President Joe Biden’s infrastructure initiative could further bolster economic growth.
Further pressuring gold, dollar climbed to a one-year high against the yen on Tuesday as investors fretted about the potential fallout from the collapse of a hedge fund, identified as Archegos Capital.
“Gold’s consolidation is breaking and if downward pressure takes prices below the $1,700 level, it could get ugly fast,” Edward Moya, senior market analyst at OANDA wrote in a note.
“Massive support throughout the pandemic has been the $1,670 level and if that doesn’t hold, not much support is seen until the $1,600 level.”
· Gold Price Analysis: XAU/USD to slide towards the $1650 mark – OCBC
Gold is falling towards the $1700 level as rising Treasury yields continue to dim the appeal of the yellow metal. Strategists at OCBC Bank continue to stay short gold as a tactical strategy.
“With 10Y Treasury yields now at 1.68%, gold looks over-valued at current levels.”
“We continue to stay short gold tactically and see its fair-value at $1650.”
Reference: CNBC, Kitco, DailyFX, FXStreet
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