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Gold Price Latest -  XAU/USD Trapped by Resistance, Will US NFPS Stoke a Move in US Treasury Yields?

Gold Price Latest - XAU/USD Trapped by Resistance, Will US NFPS Stoke a Move in US Treasury Yields?

Nick Cawley, Strategist

Gold (XAU/USD) Analysis, Price and Chart

  • US jobs report may provide tradeable clues for gold investors.
  • Resistance needs a clean break for the next leg higher.

Gold has remained in a low volatility environment for the past few weeks with the last three weeks’ price action notable for a relatively tight range. The precious metal continues to find resistance around $1,800/oz. a tough barrier to break, although trade this week suggests another attempt will be made shortly. If a break higher is to happen it will be likely triggered by Friday’s US Jobs Report (12:30 GMT), where the best part of one million new hires is expected to be announced. Any beat to the upside may rekindle inflationary fears down the road and pressure US Treasury yields higher.

Trading Forex at The News Release

Inflation is the topic of the moment in the US after US Treasury Secretary – and ex-Fed chair – Janet Yellen suggested that interest rates may have to move higher if inflation becomes less transitory. Ms. Yellen marginally backtracked on her comments later in the day but it could be that this is the first of many soft-signals of higher interest rates if inflation proves to be stickier than previously thought. Inflation expectations, using the 10-year breakevens, are at their highest level (2,47%) since April 2013. US inflation expectations were around 0.5% one year ago.

For all market-moving events and data releases, see the DailyFXCalendar

With the $1,800/oz. level holding as I write, the downside also seems to have near-term support off the 20-day simple moving average, currently around $1,777/oz. before $1,764/oz. and the April 29 low at $1,756/oz. This tight range may well be broken tomorrow on the US NFP release.

Moving Average (MA) Explained for Traders

Gold Daily Price Chart (September 2020 – May 6, 2021)

Gold Price Latest -  XAU/USD Trapped by Resistance, Will US NFPS Stoke a Move in US Treasury Yields?

Client sentiment data show 80.19% of traders are net-long with the ratio of traders long to short at 4.05 to 1. The number of traders net-long is 1.76% lower than yesterday and 5.90% lower from last week, while the number of traders net-short is 13.65% higher than yesterday and 2.28% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Gold prices may continue to fall.Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current Gold price trend may soon reverse higher despite the fact traders remain net-long.

What is Market Sentiment and How Does it Work?

What is your view on Gold – are you bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.

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

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