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
Bearish
Oil - US Crude
Bearish
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
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
GBP/USD
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
USD/JPY
Mixed
More View more
Real Time News
  • Continuation patterns can present favorable entry levels to trade in the direction of the prevailing trend. Use continuation patterns in your technical analysis here: https://t.co/TUVnO3bO1P https://t.co/vBLkMKjf4x
  • Cyclical and non-cyclical stocks can help diversify a trader’s equity portfolio. Get your guide to understanding these stocks here: https://t.co/h7BKTd2J8N https://t.co/n8vpmuLdTW
  • Key levels in forex tend to draw attention to traders in the market. These are psychological prices which tie into the human psyche and way of thinking. Learn about psychological levels here: https://t.co/8A1QhwMVKo https://t.co/CZePv1JEFh
  • The US dollar is unloved, oversold and at lows last seen over 30-months ago. At the moment there seems to be very little reason to buy the greenback. Get your $USD market update from @nickcawley1 here:https://t.co/VY3SLs35cp https://t.co/AVpY2GkGUG
  • The Spinning Top candlestick pattern forms part of the vast Japanese candlestick repertoire with its own distinct features. Gain a better understanding of the spinning top candlestick here: https://t.co/DWm7cBMUg9 https://t.co/IUii5478Jf
  • The Swiss Franc may continue higher against the US Dollar as technical pressure favors USD/CHF bears. .Get your market update from @FxWestwater here:https://t.co/yqJbbhAWiu https://t.co/TCBkQdrMAR
  • RT @jposhaughnessy: BOOM! Mystery solved. https://t.co/njXlgejE0j
  • Gold and silver prices have come under significant pressure recently. However, this correction lower could prove short-lived as price analysis hints at a reversal higher. Get your $XAUUSD market update from @DanielGMoss here:https://t.co/K1qL0fsGwy https://t.co/pH0HQmNX14
  • The dispute between the Federal Reserve and the Treasury Department concerned economists and government officials last week. Traders, however, appeared unfazed as U.S. equity markets proceeded to higher ground. Get your market update from @FxWestwater here:https://t.co/DKK7WWHKlu https://t.co/qxKvC8FAVd
  • The British Pound is eyeing a push to fresh yearly highs against the US Dollar. However, various technical setups suggest GBP could lose ground to JPY, EUR and NZD in the near term. Get your $GBP market update from @DanielGMoss here:https://t.co/NSUnZnPb4Q https://t.co/RuBAAWS37w
Gold Price Remains Underpinned by US Recession Fears

Gold Price Remains Underpinned by US Recession Fears

2018-02-16 12:30:00
Nick Cawley, Strategist
Share:

Gold and US Treasury Markets Talking Points

- Gold’s recent rally may pause for breath but higher prices look likely in the longer-term if US recessionary fears continue to build.

- The US Treasury 2-year/10-year yield spread may narrow further but strong chart support will limit the move.

Gold Price Rally Nears Recent 20-Month High

A weak US Dollar and increased worries that narrowing US Treasury yields spreads are pointing to a recession has seen spot gold gain around $120/oz since mid-December 2017. Gold is a traditional hedge used by investors when fears of a recession grow. On the weekly chart a break above the June 2016 double-top at $1,375/oz leaves the March 2014 high at $1,394/oz easily within reach, but the market may need to consolidate recent gains before it moves higher.

Inflation expectations in the US are also on the rise after recent hard data showed price pressures building, while the recent announcement of tax cuts and increased infrastructure spending also fueled fears of further price pressures. The market has priced in three 0.25% Fed rate hikes in 2018, yet despite this the path of least resistance for the greenback remains lower.

Spot Gold Price Weekly Chart in US Dollars (May 2013 – February 16, 2018)

Gold Price Remains Underpinned by US Recession Fears

Recessionary Fears Grow as US Treasury Yields Converge

The chart below shows the yield diffeential between the 2-year and 10-year UJS Treasurys (10-year yield minus the 2-year yield), a traditional indicator of an upcoming recesion. When the spread between the two narrows (becomes smaller) recession fears increase. The spread is currently at 70 basis points, down from around 120 basis points at the start of 2017.

The recent widening of the spread is likely to come under pressure after rejecting the 78bp double low seen in mid-2017, while a gap on the chart between 60bpd and 68bps needs to be filled if any upside (widening) of the spread is to materialise. Strong support for the spread is seen at 50bps.

US Treasury 2-Year/10-Year Yield Spread Daily Chart (September 2016 – February 16, 2018)

Gold Price Remains Underpinned by US Recession Fears

Retail Gold Positioning Points to Lower Prices

IG Client Sentiment data show63.9% of traders are net-long Spot Gold with the ratio of traders long to short at 1.77 to 1. The number of traders net-long is 8.8% higher than yesterday and 8.3% higher from last week, while the number of traders net-short is 2.5% higher than yesterday and 6.1% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Spot Gold prices may continue to fall. Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger Spot Gold-bearish contrarian trading bias.

We have a wide range of Trading Forecasts and Guides available to help traders make more informed decisions.

--- Written by Nick Cawley, Analyst.

To contact Nick, email him at nicholas.cawley@ig.com

Follow Nick on Twitter @nickcawley1

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

DISCLOSURES