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.

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
Subscribe
Please try again
EUR/USD
Bullish
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
Bullish
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
Gold
Mixed
GBP/USD
Bullish
USD/JPY
Mixed
More View more
Real Time News
  • Forex liquidity makes it easy for traders to sell and buy currencies without delay, and also creates tight spreads for favorable quotes. Low costs and large scope to various markets make it the most frequently traded market in the world. Learn more here: https://t.co/arxYmtQeUn https://t.co/gFVVZTGbe1
  • Forex quotes reflect the price of different currencies at any point in time. Since a trader’s profit or loss is determined by movements in price, it is essential to develop a sound understanding of how to read currency pairs. Learn how to read quotes here: https://t.co/CNtqrKWDBY https://t.co/nHXiNJhLes
  • A currency carry trade involves borrowing a low-yielding currency in order to buy a higher yielding currency in an attempt to profit from the interest rate differential. Find out if the carry trade suits your trading style here: https://t.co/7t4BzmLg8w https://t.co/h0TmJcZeqr
  • $USDCAD sold off aggressively last week, putting it into position to test the important 2017 low; trading bias is neutral to bearish. Get your market update from @PaulRobinsonFX here: https://t.co/sphxUAW9TB https://t.co/ZhsTeJOOM8
  • Get your snapshot update of the of top level exchanges and key index performance from around the globe here: https://t.co/d8Re5anlG5 https://t.co/qP96xmgDVn
  • The pro-risk Australian Dollar may extend gains after the record miss in US jobs data, amplifying dovish rhetoric from the Federal Reserve and keeping the Dow Jones and S&P 500 intact. Get your market update from @ddubrovskyFX here: https://t.co/yf8mPX3O3W https://t.co/uCCmjaxUhF
  • Who else is keeping close tabs on Dogecoin $DOGE this weekend? All eyes on Elon Musk @elonmusk, the proverbial 'Dogefather,' and his Saturday Night Live @nbcsnl performance kicking off at 11:30PM ET. The #crypto is already looking nice and perky following that trendline break! https://t.co/nrQsnlUqWj https://t.co/4lOz6NLQTG
  • There is some very interesting event risk over the opening half of this coming week of trade. It starts with Elon Musk hosting SNL tonight for Dogecoin traders and moves into US inflation data to as means to stir the ongoing Fed debate and Dollar https://www.dailyfx.com/forex/video/daily_news_report/2021/05/08/Dollar-Tumbles-Dow-Hits-Record-Highs-and-Dogecoin-Traders-Tune-In.html https://t.co/LXhjv7ToWC
  • It was a big week for Gold bulls and Gold prices broke out to fresh two-month-highs, finally taking-out the 1800 level along the way. Get your market update from @JStanleyFX here: https://t.co/D222Ni37Dv https://t.co/KcMYyx3Ro4
  • Currency exchange rates are impacted by several factors. Are different world leaders a contributing factor? Find out here: https://t.co/4jsORznRTE https://t.co/PjywaPeUsl
Gold Price Outlook: Will XAU/USD Brush off Worst Week in 5 Months?

Gold Price Outlook: Will XAU/USD Brush off Worst Week in 5 Months?

Daniel Dubrovsky, Strategist
Gold Price chart xauusd

Source: IG Charts

Gold Fundamental Outlook: Bullish

  • Gold suffers worst week in 5 months, is this a new trend?
  • Rising longer-dated government bond yields a key culprit
  • Short-term view may still favor the upside on cheap credit

Gold prices wobbled this past week, dropping 5.72 percent on Tuesday in what was the worst performance over the course of 24 hours since 2013. At one point, XAU/USD temporarily wiped out all progress it made over the last 3 weeks in a span of two days. It was the worst week in 5 months. Such volatility ought to serve as a reminder for traders of gold’s relative inferiority when it comes to liquidity compared to fiat currencies.

Gold’s performance this past week could be a foreshadowing of what the yellow metal might eventually succumb to in the medium term. Longer-dated government bond yields from developed nations rose aggressively last week. On average, the 10-year yield from the US, Germany, Japan and Australia climbed to its highest since late June.

This could be a combination of rising inflation expectations and an improving outlook for economic growth down the road. Eventually, when interest rates start rising again from near-zero levels, the appeal of gold may start to decline. But that is down the road. In the short run, XAU/USD could remain elevated as central banks refrain from raising borrowing costs.

In the near term, sudden and aggressive risk aversion could accelerate declines in gold. This is similar to what was witnessed earlier this year when global equities tumbled amid the coronavirus outbreak. That is when the haven-linked US Dollar aggressively appreciated as the world’s reserve currency. With that in mind, what are some fundamental risks XAU/USD could encounter ahead?

Rising US-China tensions are one thing. Officials were originally set to review the phase-one trade deal after 6 months this weekend. According to data from Bloomberg, China is falling well short of US agricultural purchases. At this point, agricultural exports from the US to China should amount to around US$17 billion. In reality, the value is closer to roughly $6.5 billion.

Still, White House Economic Adviser Larry Kudlow said that the trade deal is “fine” and that China is “substantially” ramping up purchases of local goods. These talks were postponed indefinitely according to people familiar with the matter. Still, traders should be wary of the risk of verbal jabs between the two nations. Otherwise, this could be one less downside catalyst for gold to worry about in the short run.

For updates on gold including technical levels, be sure to follow me on Twitter @ddubrovskyFX.

Another concern is the ongoing stalemate in a second US fiscal stimulus package, but markets may be betting on an eventual deal. President Donald Trump’s executive order to extend certain provisions of the original deal may also be aiding to keep market volatility at bay. If longer-dated government bond yields continue their upside momentum, gold may find it increasingly harder to set higher highs.

Having said that, the near term prospects still seem to be favoring the upside. Last week, Dallas Fed President Robert Kaplan noted that he is willing to see inflation run above the 2% target subject to conditions. Ultra-lose monetary policy prospects would likely continue favoring the upside for the yellow metal.

Discover your trading personality to help find forms of analyzing financial markets

Gold Fundamental Drivers – Weekly Chart

Gold Chart

Gold Chart Created in TradingView

*Majors-based USD index averages it against: EUR, JPY, GBP and AUD

--- Written by Daniel Dubrovsky, Currency Analyst for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter

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

DISCLOSURES