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
Mixed
Oil - US Crude
Mixed
Wall Street
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
Gold
Mixed
GBP/USD
Mixed
USD/JPY
Mixed
More View more
Real Time News
  • President Biden: Willing to compromise on infrastructure. $DIA $USD
  • Despite a rise in US 10yr Treasury yields to a multi-day high, the US Dollar has remained weaker today. The $DXY is now trading back below the 91.10 level. $USD https://t.co/gQbHLTf5tj
  • this was the central focus of the q2 tech forecast on $USD. Monthly chart, resistance on underside of long-term trend channel after fibo support helped to provide the bounce in early-Q1 https://www.dailyfx.com/forex/market_alert/2021/04/04/USD-Q2-2021-Technical-Forecast.html https://t.co/vtSoeJ4dsi
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Silver are long at 92.55%, while traders in Germany 30 are at opposite extremes with 80.61%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/rs6RgWvlsG
  • Commodities Update: As of 16:00, these are your best and worst performers based on the London trading schedule: Oil - US Crude: 0.27% Gold: -0.27% Silver: -0.90% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/XXWvUv4FbP
  • US Indices are all trading in the red today, with Tech and Small Caps both down over 1%. DOW -0.53% SPX -0.71% NDX -1.30% RUT -1.58% $DIA $SPY $QQQ $IWM
  • USD/CAD trades to a fresh monthly low (1.2471) following the failed attempt to push back above the 50-Day SMA (1.2585). Get your $USDCAD market update from @DavidJSong here:https://t.co/H4HSs3F399 https://t.co/XNCeAY4VJS
  • Forex Update: As of 16:00, these are your best and worst performers based on the London trading schedule: 🇬🇧GBP: 1.01% 🇯🇵JPY: 0.65% 🇨🇭CHF: 0.50% 🇪🇺EUR: 0.41% 🇦🇺AUD: 0.33% 🇨🇦CAD: -0.12% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/84xpQjIXNy
  • The Cable Come Back $GBPUSD hard charging for that 1.4000 handle - the same that rebuked the advance multiple times in March https://t.co/8LCcOxhGVF
  • $USD now down to the next fibo level, trying to grasp on to the 618 Q2 reversal theme still in play https://t.co/2VG2DW5lX5 https://t.co/vjzCG0gxHk
Gold Price Forecast: Rising Yields, USD and Powell's Testimony in Focus

Gold Price Forecast: Rising Yields, USD and Powell's Testimony in Focus

Margaret Yang, CFA, Strategist

GOLD PRICE OUTLOOK:

  • Gold prices bounced off key support at US$ 1,774 as the US Dollar weakened
  • Rising 10-year Treasury yields and real yields may cap upside potential
  • The world’s largest bullion ETF saw continuous outflows as investors turned to riskier assets
Gold Forecast
Gold Forecast
Recommended by Margaret Yang, CFA
Get Your Free Gold Forecast
Get My Guide

Gold prices edged slightly higher during APAC session on Monday as the US Dollar (DXY) index traded steadily near the 50-Day Moving Average line. US Dollar weakness over the last two sessions offered gold prices some relief after a heavy selloff observed earlier last week. Markets await a fresh US$ 1.9 trillion US Covid relief package to be approved by Congress this week, while anticipating Fed Chair Jerome Powell’s speech in the semiannual monetary policy report to Congress this Tuesday.

Gold prices have been trending lower since early January, weighed by vaccine progress and rising longer-dated Treasury yields. The 10-year US Treasury yield climbed to a fresh 12-month high of 1.370% on Monday as vaccine rollouts and stimulus hopes bolstered inflation expectations. Meanwhile, reflation hopes probably led to a rotation out from safe-havens such as Treasuries into riskier assets, resulting in rising yields.

US real yields, represented by 10-year Treasury inflation-indexed securities, also climbed to -0.87% on February 18th, hitting the highest level since November 24th. Real yields exhibit a historically negative correlation with gold prices, and their inverse relationship can be visualized in the graph below. Further rises in real yields may serve to undermine gold prices, which is non-yielding.

Gold Prices vs. 10-Year Treasury Inflation-Indexed Security

Gold Price Forecast: Rising Yields, USD and Powell's Testimony in Focus

Source: FRED

With inflation and rising yields increasingly concerning traders, Jerome Powell’s testimony this Tuesday will be closely eyed for any clues about future tapering. In view of encouraging vaccine progress around the globe and robust US retail sales figures in January, it might be difficult to argue that the economy remains weak and risks are skewed to the downside. However, any hint about tapering may be illusive as the job market has a long path to achieve full employment and core PCE inflation is well below the Fed’s 2% target. Nonetheless, it would be critical to see how Powell addresses surging yields and inflation expectations, which might inhibit the central bank from carrying out further easing measures.

Powell’s testimony may lead to heightened volatility in the US Dollar (DXY) index, which tends to be inversely correlated to gold prices. Gold prices exhibited a negative relationship with the DXY, with a correlation coefficient of -0.75over the past 12 months.

Gold vs. DXY US Dollar Index – 12 Months

Gold Price Forecast: Rising Yields, USD and Powell's Testimony in Focus

Source: Bloomberg, DailyFX

The world’s largest gold ETF - SPDR Gold Trust (GLD) – saw continuous net capital outflows over the past few weeks. The number of GLD shares outstanding decreased to 386.7 million for the week ending February 19th 2021 from a recent high of 407.1 million observed on January 4th, marking a 20.4 million decline. Gold prices and the number of outstanding GLD shares have exhibited a strong positive correlation of 0.92 over the past 12 months (chart below).

Gold Price vs. GLD ETF Shares Outstanding – 12 Months

Gold Price Forecast: Rising Yields, USD and Powell's Testimony in Focus

Source: Bloomberg, DailyFX

Technically, A “Descending Channel” is forming with consecutive lower highs and lower lows on the 4-hour chart. The ceiling of the “Descending Channel” may serve as immediate resistance, while the floor may serve as immediate support. The overall trend remains bearish-biased as suggested by downward-sloped moving averages. The MACD indicator has formed a bullish crossover, suggesting that a near-term rebound is possible.

Gold Price4 Hour Chart

Gold Price Forecast: Rising Yields, USD and Powell's Testimony in Focus
Gold Mixed
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily 0% 0% 0%
Weekly -2% 3% -1%
What does it mean for price action?
Get My Guide

IG Client Sentiment indicates that retail gold traders are leaning heavily towards the long side, with 88% of positions net long, while 12% are net short. Traders have increased both long (+3%) and short positions (+9%) overnight. Compared to a week ago, traders have increased long positions substantially (+21%) while cutting short bets (-15%).

{{GUIDE|BUILDING_CONFIDENCE_IN_TRADING }}

--- Written by Margaret Yang, Strategist for DailyFX.com

To contact Margaret, use the Comments section below or @margaretyjy on Twitter

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

DISCLOSURES