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
Bearish
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
Mixed
GBP/USD
Mixed
USD/JPY
Bullish
More View more
Real Time News
  • Are you new to trading? Technical analysis of charts aims to identify patterns and market trends by utilising different forms of technical chart types and other chart functions. Get a refresher on technical analysis or begin building your knowledge here: https://t.co/qV3c7a4YR3 https://t.co/POGWDIkqqz
  • USD hegemony is at risk thanks to changes in the global economy and the long-term consequences of the US-China trade war. Get your market update from @CVecchioFX here: https://t.co/5GO9UrvO4y https://t.co/H76jNJJxU5
  • Did you know a Doji candlestick signals market indecision and the potential for a change in direction. What are the top five types of Doji candlesticks? Find out https://t.co/c51s3IBcEu https://t.co/1TiEWCbJ6t
  • Use this technical analysis pattern recognition skills test to sharpen your knowledge: https://t.co/Qgz89PTxnu https://t.co/fN2mfHgpON
  • The formation of several bullish technical patterns suggests that the haven-associated Japanese Yen is at risk of further losses against the Euro and Australian Dollar. Get your market update from @DanielGMoss here:https://t.co/qxQwHgD9Ey https://t.co/ym73tgtHLn
  • Natural gas is moving lower after weather models pointed to warmer-than-average temperatures across much of the US. Get your market update from @FxWestwater here:https://t.co/HuXPXu5PFU https://t.co/ytHqOoHnxQ
  • Gold and silver prices may continue to rise in the coming months on the back of falling real rates of return and the prospect of additional fiscal support under a Biden administration. Get your market update from @DanielGMoss here:https://t.co/OMNoNHn2vZ https://t.co/155l4SQU6P
  • Will the Swiss Franc find reprieve after recent losses against the Canadian and New Zealand Dollars as NZD/CHF and CAD/CHF uptrends face key chart barriers? Find out from @FxWestwater here:https://t.co/c89gcaNhTt https://t.co/vkLRsG8KEn
  • The Australian Dollar may be at risk of losses against the New Zealand Dollar after an unexpectedly high NZ inflation reading sent AUD/NZD towards challenging short-term rising trend support. Get your $AUD market update from @ddubrovskyFX here:https://t.co/JoaUMTv80S https://t.co/Hl4I8Gl7Ez
  • Japanese candlesticks are a popular charting technique used by many traders, and the shooting star candle is no exception. Learn about the shooting star candlestick and how to trade it here: https://t.co/mfwJ0sZLTs https://t.co/6lPNDoWZAw
Gold Price Outlook: XAU/USD Still Primed for Higher Ground

Gold Price Outlook: XAU/USD Still Primed for Higher Ground

Thomas Westwater, Contributor

Gold, XAU/USD, Inflation Bets - Talking Points

  • XAU/USD still primed for move higher as Fed’s QE continues to expand
  • Shifting U.S. political climate poses risks to gold’s fundamental drivers
  • Treasury-Federal Reserve discourse over CARES funding boosts gold

XAU/USD Fundamental Outlook: Bullish

Advertisement

Gold prices fell for a second consecutive week as traders reassessed their outlook on global markets. Fundamental macro drivers in the global economy continue to rapidly shift. The yellow metal is down over 4.5% from its monthly high of 1965.55 set on November 9. Despite the recent drop, XAU/USD remains over 20% higher year-to-date. Still, recent discourse between the Federal Reserve and the Treasury injected some risk-off bidding on gold to end the week, pushing prices marginally higher.

Treasury Secretary Steven Mnuchin, in a letter to the Federal Reserve, asked for about $430 billion in unused CARES Act funding to be returned from a portion of emergency lending facilities set to expire at the end of the year. The letter caused some confusion, resulting in a response from the Federal Reserve highlighting the need for these facilities to continue as a backstop. Gold reacted to the uncertainty, rising above the 1870 handle.

Gold Hourly Price Chart

Gold price chart

Chart created with TradingView

Gold bullish sentiment has been flying high this year, as the inflation hedge looked primed to benefit traders’ portfolios. Investors keyed in on several bullish drivers, but one principal cause stands out, unprecedented monetary stimulus. Faced with severe economic consequences this year, central banks worldwide took decisive action through monetary policy tools, most notably quantitative easing. The Federal Reserve’s balance sheet continues to grow as these efforts continue.

Federal Reserve Balance Sheet, TIPS Bond ETF, Gold

Gold vs TIPS vs Fed balance sheet

Chart created with TradingView

That said, investors and economists forecasted an environment conducive to rising inflationary pressures. So far, however, inflation has failed to manifest through current data in a meaningful way. Market expectations still appear poised to the upside, though to a lesser extent. The iShares TIPS bond ETF, which tracks U.S. inflation-protected securities, has risen alongside gold for much of this year. The recent pullback in the ETF reflects well with Gold’s decline following highs set in August.

How to Use IG Client Sentiment in Your Trading
How to Use IG Client Sentiment in Your Trading
Recommended by Thomas Westwater
Improve your trading with IG Client Sentiment Data
Get My Guide

The easing in inflation expectations is likely, in part, caused by the 2020 U.S. election outcome. The projected political climate in the country appears poised to deliver less fiscal stimulus as the projected presidential winner, Joe Biden, will likely face pushback from the GOP-controlled Senate on any significant stimulus measure. Consequently, inflationary pressures appear less likely on the fiscal side.

All things considered, the economic outlook remains subject to the ongoing Covid pandemic. While a vaccine approval appears imminent, distribution will likely take many more months. In the meantime, the worsening virus situation leaves much uncertainty for investors to mull over. Overall, with the Federal Reserve and other central banks continuing to support the economy through monetary efforts, the outlook for gold should remain to the upside, despite a muddied outlook on fiscal stimulus.

XAU/USD TRADING RESOURCES

Just getting started? See our beginners’ guide for FX traders

What is your trading personality? Take our quiz to find out

Join a free webinar and have your trading questions answered

--- Written by Thomas Westwater, Analyst for DailyFX.com

To contact Thomas, use the comments section below or @FxWestwater on Twitter

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

DISCLOSURES