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
Bullish
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
Bearish
More View more
Real Time News
  • US 10yr yields have continued to decline today, now trading below the 1.55% level, at a five week low. $USD https://t.co/oBIG5S9GIc
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Silver are long at 92.43%, while traders in Wall Street are at opposite extremes with 75.26%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/Z4rveKKbMs
  • Bitcoin rushed up to another fresh all-time-high yesterday as the Coinbase IPO was taking markets by storm. Get your $btc market update from @JStanleyFX here:https://t.co/Adn9H2fqHs https://t.co/sGZi273oVZ
  • $NZDUSD has held onto its gains from yesterday and has edged higher today, hitting an intraday high around 0.7180. The pair is trading around a three week high. $NZD $USD https://t.co/38WqyH6w3T
  • $Gold making a move, testing above neckline resistance $GC https://t.co/ihw9shsh0Y https://t.co/v3Tmc1HRqi
  • Commodities Update: As of 16:00, these are your best and worst performers based on the London trading schedule: Silver: 2.05% Gold: 1.84% Oil - US Crude: 0.16% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/Vv02LLsKur
  • Forex Update: As of 16:00, these are your best and worst performers based on the London trading schedule: 🇳🇿NZD: 0.39% 🇦🇺AUD: 0.29% 🇯🇵JPY: 0.18% 🇬🇧GBP: -0.00% 🇪🇺EUR: -0.11% 🇨🇦CAD: -0.20% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/XQ1iXE2Tg0
  • Ethereum has been on a massive run of late, but 2500 may be a stumbling block or perhaps a pause point. but major psych level + 161.8 fibo extension of prior counter-trend move. counter-trend move took place after first incursion of 2k. will 2500 be a repeat? $ETHUSD https://t.co/UpfxKOHX5t https://t.co/2AcNjCEht1
  • Bitcoin (BTC/USD) Support Test as Ethereum (ETH/USD) to Fresh Highs https://www.dailyfx.com/forex/fundamental/daily_briefing/session_briefing/daily_fundamentals/2021/04/15/bitcoin-btc-support-test-ethereum-eth-to-fresh-highs.html #Bitcoin $BTC https://t.co/M6BhcNECPs
  • Indices Update: As of 16:00, these are your best and worst performers based on the London trading schedule: US 500: 0.80% Wall Street: 0.76% FTSE 100: 0.07% France 40: 0.05% Germany 30: 0.02% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/j8kyX7E8yq
Gold Price Forecast: Vulnerable to a Pullback as Yield Resurges. US Inflation Data in Focus

Gold Price Forecast: Vulnerable to a Pullback as Yield Resurges. US Inflation Data in Focus

Margaret Yang, CFA, Strategist

GOLD PRICE OUTLOOK:

  • Gold prices retreated slightly during APAC trade as the US Dollar rebounded alongside yields
  • US February consumer price index data is in focus as traders look for signs of inflation overheat
  • 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 retreated slightly during the APAC session on Wednesday as the US Dollar (DXY) index rebounded alongside longer-term Treasury yields. In the prior day, gold prices posted the biggest jump in two months as Treasury yields retreated after a strong 3-year note auction. A decent pullback in the US Dollar (DXY) index on Tuesday offered gold prices some relief after a prolonged selloff. This rebound may once again prove to be short-lived however, if yields resume their upward trajectory amid a broad reflationary theme. The upcoming 10- and 30-year Treasury note auctions will be in focus this week.

On the macro front, gold traders are eyeing US February consumer price index data for clues about the Fed’s future tapering trajectory. In view of an improved recovery outlook and surging raw material prices over the past few months, upward price pressure is expected to emerge in the months to come. Any signs of inflation overheating may intensify market speculation about the Fed tapering stimulus efforts and may fuel further strength in longer-dated yields as well as the US Dollar. This scenario may exert further pressure on precious metals.

Meanwhile, markets await a fresh US$ 1.9 trillion US Covid relief package to be approved by the House this week, though the expectation has largely been priced in and therefore should have limited market impact.

US real yields(nominal yield – inflation), represented by 10-year Treasury inflation-indexed securities, fell 7bps to -0.69% on March 9th from a day ago, offering bullion prices some relief. Real yields exhibit a historically negative correlation with gold, with their 12-month correlation coefficient standing at -0.89. 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: Vulnerable to a Pullback as Yield Resurges. US Inflation Data in Focus

Source: Bloomberg, DailyFX

The release of US inflation figures may also lead to heightened volatility in the US Dollar (DXY) index, which tends to be inversely correlated to gold prices. They have a correlation coefficient of -0.69over the past 12 months.

Gold vs. DXY US Dollar Index – 12 Months

Gold Price Forecast: Vulnerable to a Pullback as Yield Resurges. US Inflation Data 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 fell to 364.3 million on March 9th from a recent high of 407.1 million observed on January 4th, marking a 42.8 million decline over two months. Gold prices have fallen by 11.6% during the same period, suggesting that capital was fleeing from the yellow metal into riskier assets looking for yield and growth. 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: Vulnerable to a Pullback as Yield Resurges. US Inflation Data in Focus

Source: Bloomberg, DailyFX

Technically, gold prices broke below the “Descending Channel” with strong downward momentum, with the floor of the “Descending Channel” becoming an immediate resistance level. The overall trend remains bearish-biased as suggested by downward-sloped moving averages. The MACD indicator is about to form a bullish crossover, suggesting that a near-term rebound is possible. A daily close above the floor of the “Descending Channel” may intensify near-term buying pressure and bring the 127.2% Fibonacci extension level (1,734) into the crosshairs.

Gold PriceDaily Chart

Gold Price Forecast: Vulnerable to a Pullback as Yield Resurges. US Inflation Data in Focus
Gold Mixed
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily 0% 7% 1%
Weekly 2% -9% 0%
What does it mean for price action?
Get My Guide

IG Client Sentiment indicates that 84% of retail traders are net-long with the ratio of traders long to short at 5.25. The number of traders net-long is 4% lower than yesterday and 5% higher from last week, while the number of traders net-short is 38% higher than yesterday and 6% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are heavily leaning to the long side suggests that gold prices may continue to fall.

However, traders are more net-short than yesterday and last week. Recent changes in sentiment warn that the price trend may soon reverse higher despite the fact traders remain net-long.

{{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