0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
EUR/USD
Bearish
Oil - US Crude
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Wall Street
Mixed
Gold
Bearish
GBP/USD
Bearish
USD/JPY
Mixed
More View more
Real Time News
  • Australian Dollar Price Forecast: AUD/USD Threatens Reversal https://www.dailyfx.com/forex/fundamental/daily_briefing/session_briefing/daily_fundamentals/2020/08/11/Australian-Dollar-Price-Forecast-JS-Aussie-AUDUSD-AUD-USD-Threatens-Reversal.html https://t.co/lZtZoUmW1T
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 96.17%, while traders in Wall Street are at opposite extremes with 74.60%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/rvvFLo185X
  • Indices Update: As of 18:00, these are your best and worst performers based on the London trading schedule: Wall Street: 1.12% FTSE 100: 0.59% US 500: 0.49% France 40: 0.15% Germany 30: 0.07% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/O4DfCQgZKi
  • #Gold prices remain at risk on the back of this recent stretch to record highs for a larger correction within the confines of the broader uptrend. Get your $XAUUSD technical analysis from @MBForex here: https://t.co/bNCJDAJigb https://t.co/IHIeeAMRHO
  • 1. Nasty pullback in Gold - retracement or reversal? 2. USD builds in another range, how long will it hold? 3. Reversal potential in Aussie, Kiwi and maybe even the Euro... all topics up for discussion in today's webinar, starting right now https://www.dailyfx.com/webinars/980972059
  • Gold's drop today is at present the worst single-day drop in percentage terms since June 2013. Net spec futures positioning in blue. Parabolic rallies earn commensurate declines https://t.co/D2XUWQ9v6I
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 96.08%, while traders in Wall Street are at opposite extremes with 75.06%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/AFUuvkM71w
  • Not exactly a summer lull in NZD overnight vols (highest since March) Question is, will the RBNZ stand for an overshoot of NZD TWI over its projection Reminder, at the last meeting, the RBNZ stated that NZD appreciation has placed further pressure on export earnings https://t.co/CN7AP4ErIm
  • Commodities Update: As of 16:00, these are your best and worst performers based on the London trading schedule: Oil - US Crude: 0.86% Gold: -3.90% Silver: -6.93% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/9XLsJuHK4f
  • Hey traders! We continue to drag higher for risk assets. What are some market highlights for the day? Find out from @DailyFX Chief Strategist @JohnKicklighter 👇 https://t.co/5BDoY4Ui5d
Gold Price Forecast Brightens amid Drop in US Treasury Yields

Gold Price Forecast Brightens amid Drop in US Treasury Yields

2019-03-21 00:35:00
Christopher Vecchio, CFA, Senior Strategist
Share:

Talking Points

- The FOMC’s decision to withdraw any expectation of a rate hike in 2019 proved to be more dovish than market participants were pricing in – hence the big market reaction.

- Gold prices may see further gains as US Treasury yields continue their break lower in the near-term.

- Retail traders are decidedly mixed on the US DollarEURUSD, GBPUSD, and USDJPY all have different biases.

Looking for longer-term forecasts on the US Dollar? Check out the DailyFX Trading Guides.

The March Fed meeting came in on the dovish side of expectations, even though market participants were pricing in a dovish tone to begin with. By choosing to not only cut growth and inflation forecasts in the Summary of Economic Projections but also removing any expectation of a rate hike in 2019, the FOMC came in with their most dovish policy shift in years – perhaps pre-dating the start of the Fed hike cycle in November 2015.

US Treasury Yields Breakdown

Coming into this week, US Treasury yields already looked like they were wanting to break lower. The March Fed meeting gave yields all the reason in the world to do so: the prospect of another rate hike this year was eliminated. Removing the possibility of a 25-bps rate hike in 2019 underscores a bigger concern for yields, however: that the Federal Reserve is becoming increasingly warry of the state of the US economy.

Why does that matter for yields? The US Treasury 2-year yield is seen as a proxy for inflation while the 10-year yield is seen as a proxy for growth. That both of these maturities saw their yields fall to fresh monthly lows (and in the case of the latter, to fresh yearly lows) suggests that a profound shift did indeed occur today. Consider the context of the recent breakdown in the US Treasury 10-year yield:

US Treasury 10-year Yield Chart: Daily Timeframe (March 2016 to March 2018) (Chart 1)

Gold Price Forecast Brightens amid Drop in US Treasury Yields

The symmetrical triangle that formed came after a break of the 2016 to 2018 uptrend. Last week it was noted that “the higher probability move would be for lower yields. That is: a break of a long-term uptrend; followed by a symmetrical triangle consolidation; the triangle breaks lower.” Price action today produced a fresh yearly low in the 10-year yield, confirming that a breakout is underway. As is often the case, what happens in bond markets is usually felt in other asset classes.

US Treasury 10-year Yield: 20-day Correlation to Gold Prices (March 2017 to March 2018) (Chart 2)

Gold Price Forecast Brightens amid Drop in US Treasury Yields

Good News for Gold Prices?

The US Treasury 10-year yield and Gold prices have continued to hold a negative 20-day correlation since we last checked in on Friday. If the observation that a “turn lower in the US Treasury 10-year yield may prove beneficial to Gold prices,” then this should be the time that Gold prices should be showing signs of bullish resolve.

Gold Price Chart: Daily Timeframe (June 2018 to March 2019) (Chart 3)

Gold Price Forecast Brightens amid Drop in US Treasury Yields

Gold price action today produced a bullish outside engulfing bar on the daily timeframe (price closed at 1312.34, clearing the prior day high of 1310.83), concurrently seeing price close back above the daily 8-, 13-, and 21-EMA envelope. The combination of a strong candle and momentum indicators accelerating to the topside may bode well for Gold prices in the near-term.

Even though Gold prices pulled back at the end of February, pullback saw the March low establish a “higher low” than the January swing lows; the series of higher lows is coming above the 61.8% retracement of the entire 2018 high-low range. In the immediate term, more gains look increasingly possible; a move below the March FOMC meeting day low (1298.53) would negate optimism.

Read more: US Dollar Mired in Range; US Yields Breakdown May Boost Gold Prices

FX TRADING RESOURCES

Whether you are a new or experienced trader, DailyFX has multiple resources available to help you: an indicator for monitoring trader sentiment; quarterly trading forecasts; analytical and educational webinars held daily; trading guides to help you improve trading performance, and even one for those who are new to FX trading.

--- Written by Christopher Vecchio, CFA, Senior Currency Strategist

To contact Christopher Vecchio, e-mail at cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

View our long-term forecasts with the DailyFX Trading Guides

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.