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Gold Price Rise Stalled as the US Dollar and Bond Yields Clash

Gold Price Rise Stalled as the US Dollar and Bond Yields Clash

Ilya Spivak, Head Strategist, APAC


  • Gold prices pinned in place as the US Dollar, bond yields clash
  • All eyes on next week’s Jackson Hole symposium for trend cues
  • Dallas Fed President Kaplan headlines skinny Friday docket

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Gold prices idled this week even as the markets grappled with pricing in the seemingly nearing start of Fed stimulus withdrawal. Minutes from July’s FOMC meeting hinted that tapering QE asset purchases may begin this year, punctuating months of carefully-worded adjustment in the policy guidance from officials.

This duly sent the US Dollar sharply higher, which might’ve been expected to sink bullion. It also soured broader sentiment however, pushing capital flows out of riskier assets and into the safety of government bonds. That anchored yields, offering a reprieve to the non-interest-bearing yellow metal.

Chart created using TradingView

Looking ahead, a barebones data docket seems unlikely to inspire directional development as all eyes fixate on next week’s Jackson Hole symposium. The annual conclave is often the forum for unveiling major changes in Fed officials’ thinking, from which subsequent policy changes flow.

That may leave gold prices tethered to familiar ranges for now. A speech from Dallas Fed President Robert Kaplan is due, but his relatively hawkish disposition is well-known to traders. To that end, familiar rhetoric may not be market-moving.

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Gold prices have stalled having bounced to retest the familiar congestion area clustered around the 1800/oz figure. A pullback from here sees initial support in the 1755-65 zone, marked by another long-standing inflection region as well as the 38.2% Fibonacci expansion.

Breaking lower with confirmation on a daily closing basis puts the 50% Fib at 1717.42 into focus, followed by the 2021 bottom in the 1670-80 area. The 61.8% expansion acts as reinforcement here. Alternatively, securing a breach above resistance may bring a test of the 1830-40 sector.

Gold price chart created using TradingView


--- Written by Ilya Spivak, Head Strategist, APAC for DailyFX

To contact Ilya, use the comments section below or @IlyaSpivak on Twitter

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