· Gold holds firm above $1,800 as U.S. bond yields weaken
Gold prices consolidated slightly above the key $1,800 level on Thursday, supported by softer U.S. bond yields as investors focused on how central banks respond to rising price pressures.
Spot gold rose 0.3% to $1,802.40 per ounce by 0727 GMT. U.S. gold futures gained 0.3% to $1,803.90.
Benchmark 10-year U.S. Treasury yields steadied close to a two-week trough, decreasing the opportunity cost of holding non-yielding bullion.
“We’re seeing some more buyers being drawn into the gold market and that’s partly around the narrative of higher prices,” said Nicholas Frappell, global general manager at ABC Bullion.
Investors now await the European Central Bank (ECB) policy meeting due later in the day, followed by the U.S. Federal Reserve meeting on Nov. 3.
Market participants also took stock of the Bank of Japan retaining its easy monetary policy and projecting inflation at well below its target for at least the next two years.
Gold is often considered an inflation hedge, though reduced stimulus and interest rate hikes push government bond yields up, denting gold’s appeal.
“Negative real yield and inflation risks will help gold prices to move to $1,850/oz before retreating next year and beyond,” ANZ analysts said in a note, cautioning that an expected Fed taper announcement in November weighed on gold’s outlook.
· Demand for gold fell in the third quarter to its lowest since the last quarter of 2020, the World Gold Council (WGC) said.
WGC, however, expects physical demand in large consumer India to strengthen in the fourth quarter.
· Gold Price Forecast: Bull’s eye $1,800 as US T-bond yields plummet as central banks cut stimulus
Gold climbs during the New York session, is up 0.20%, trading at $1,796.47 a troy ounce at the time of writing. The non-yielding metal recovered some of its brightness as the session progressed, boosted by safe-haven flows.
Expectations around gold lie heavily on the Federal Reserve November meeting. A $15 Billion bond taper is priced in. However, If the Federal Reserve aims for a quicker than expected bond-tapering, that might send gold tumbling below the $1,720 threshold and potentially towards a renewed test of 2021 lows.
"XAU/USD Price Forecast: Technical outlook: Daily chart"
Gold (XAU/USD) spot price is above the confluence of the 100 and 200-day moving average (DMA) and on Tuesday broke a downward slope trendline previously resistance-turned-support, which could be viewed as a bullish signal. The Relative Strength Index (RSI) is at 58, aims slightly low, but as it remains above the 50-midline, it is bullish for the yellow metal.
To resume the upward trend, gold buyers will need a daily close above $1,800. In that outcome, the September 3 high at $1,834 would be the first resistance level. A clear break above the latter would expose the June 4 low at $1,855, followed by the $1,900 threshold.
Platinum gained 0.6% to $1,016.77 and palladium rose 1.3% to $1,990.23.
“Slowing auto growth due to semi-conductor supply shortages is weighing on auto catalyst demand for PGMs. We see prices remaining volatile until micro-chip shortages ease,” ANZ
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