Gold Prices Hit By Rising US Yields Lifting The US Dollar

1. Gold Prices Hit By Rising US Yields
Lifting The US Dollar

2. Points To Be Discussed Today:
• Gold Has Been Crushed
• Gold Technical Analysis & Overview
• Gold Fundamental Overview
• Gold Spot/ U.S. Dollar
• XAUUSD Chart
• Shorting Opportunity In XAUUSD ( Gold )

3. Gold Has Been Crushed
• Gold has been crushed in the last few sessions
as the US Dollar has strengthened across the
board after US President Joe Biden re-
nominated Jerome Powell to Chair the Federal
Reserve Bank.
• This saw US Treasury yields soar, sending the
US Dollar index (DXY) to 16-month highs.

4. US Dollars Has Driven Gold Lower
• Although Mr. Powell was the favourite for
another term nomination, his alternative, Lael
Brainard, was seen by the market as more dovish.
• With uncertainty around leadership at the Fed all
but resolved, the focus returned to the pace of
reducing monetary policy stimulus.
• While demand for US Dollars has driven gold
lower, inflation and real yields appear to have
also played a role.

5. Break-even Inflation Rates
• At a time when nominal yields are rising,
break-even inflation rates are falling.
• This is particularly so in the back end of the
curve.
• 30-year market priced inflation has moved
from 2.44% to as low as 2.37% in the
aftermath of Powell’s re-nomination

6. Inflation Expectations
• This has boosted real yields. This is a double
hit for gold on the interest rate front.
• Inflation expectations are falling while
nominal yields are rising, making Treasuries a
potentially more attractive investment.
• In the past, when real yields are rising, gold
has often depreciated.

7. The Outlook For Gold
• For now, the outlook for gold appears to be
beholden to US Dollar direction.
• USD appears to at the whim of US yields,
which are being determined by the markets’
perception of the timeline of the Fed’s
stimulus reduction.

8. Gold Technical Analysis
• The broad range of 1676.91 – 1916.53, in play
since earlier in the year, might provide support
and resistance respectively.
• Gold has recently mean reverted to the middle of
this wide range.
• While it broke down through the 10 and 21-day
short-term simple moving averages (SMA), it
appears to have stalled as it approached the 55,
100 and 200-day medium and longer-term SMAs.

9. Gold Technical Analysis - I
• A conclusive move below these SMAs might
see bearish momentum unfold.
• Support could be at the previous lows of
1758.93, 1750.25, 1721.71 and 1676.91.
• On the topside, possible resistance might be
at the pivot points of 1813.94 and 1834.14 or
at the previous highs of 1877.15 and 1916.53.

10. Gold Technical Overview

11. Gold Technical Overview - I
• Gold price is carving out a bear flag formation
on the four-hour chart, given the latest uptick,
which followed Tuesday’s tumble.
• The Relative Strength Index (RSI) has
recovered from extremely oversold
conditions, offering some breathing space yet
again for gold sellers.

12. Gold Technical Overview - II
• Therefore, a four-hourly candlestick closing below
the rising trendline support at $1,790 is needed
to confirm a downside breakout from the bearish
continuation pattern.
• Bears will then keep their eyes on the pattern
target measured at $1,707.
• However, the November 4 lows of $1,769 could
challenge the bullish commitments before.
• The $1,750 psychological level could be next on
their radars.

13. Gold Technical Overview - II
• On the flip side, the rising trendline resistance
at $1,798 will cap the recovery attempts.
• Acceptance above the latter will invalidate the
bearish formation, opening doors for a retest
of the horizontal 200-Simple Moving Average
(SMA) at $1,806.
• However, with the 21 and 100-SMAs bearish
crossover playing out, the downside appears
more compelling for gold price.

14. Gold Fundamental Overview
• Gold bears are taking a breather on
Wednesday, contemplating the next move
ahead of a bunch of critical US data and Fed
minutes.
• The FOMC minutes could shed fresh insights
on the central bank’s rate hike outlook, in the
wake of the rising inflationary pressures and
robust economic recovery.

15. Gold Fundamental Overview - I
• Heading into the key event risks,
investors assess the impact of a sooner
Fed’s tightening on the economic growth,
keeping them unnerved.
• Meanwhile, the European covid curbs
also sap the market’s confidence.

16. Gold Fundamental Overview - II
• The risk-off market mood boosts the safe-
haven flows into the US Treasuries, fuelling a
fresh retreat in the yields while offering some
reprieve to gold bulls.
• Ahead of the FOMC minutes, the US PCE
Inflation, GDP and Durable Good data will
influence the dollar and gold valuations as
well.

17. Gold Spot/ U.S. Dollar

18. XAUUSD Chart

19. Shorting Opportunity In XAUUSD ( Gold )

20. Gold Prices Hit By Rising US Yields
Lifting The US Dollar

21. Thanks for listening
Gold Prices Hit By Rising US Yields
Lifting The US Dollar