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. See our updated Privacy Policy here.

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
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
Oil - US Crude
Mixed
Wall Street
Bearish
Gold
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
GBP/USD
Mixed
USD/JPY
Bullish
More View more
Real Time News
  • good morning, happy Fed day and it's a big one for Powell. Fed looking to thread the needle bw acknowledging above forecast inflation while also not getting too jumpy on policy parameters. $USD hanging around resistance ~90.67 https://t.co/RBqrxSoQb7 https://t.co/0nNfWmQB6X
  • Forex Update: As of 12:00, these are your best and worst performers based on the London trading schedule: 🇳🇿NZD: 0.42% 🇦🇺AUD: 0.33% 🇬🇧GBP: 0.30% 🇨🇦CAD: 0.09% 🇪🇺EUR: -0.02% 🇨🇭CHF: -0.04% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/PuVGKbAJvW
  • Heads Up:🇺🇸 Building Permits MoM (MAY) due at 12:30 GMT (15min) Previous: -1.3% https://www.dailyfx.com/economic-calendar#2021-06-16
  • Heads Up:🇺🇸 Housing Starts MoM (MAY) due at 12:30 GMT (15min) Previous: -9.5% https://www.dailyfx.com/economic-calendar#2021-06-16
  • Heads Up:🇨🇦 Inflation Rate MoM (MAY) due at 12:30 GMT (15min) Expected: 0.4% Previous: 0.5% https://www.dailyfx.com/economic-calendar#2021-06-16
  • Heads Up:🇨🇦 Inflation Rate YoY (MAY) due at 12:30 GMT (15min) Expected: 3.5% Previous: 3.4% https://www.dailyfx.com/economic-calendar#2021-06-16
  • Heads Up:🇨🇦 Core Inflation Rate YoY (MAY) due at 12:30 GMT (15min) Expected: 2.4% Previous: 2.3% https://www.dailyfx.com/economic-calendar#2021-06-16
  • Currency exchange rates are impacted by several factors. Are different world leaders a contributing factor? Find out here: https://t.co/4jsORznRTE https://t.co/iNRhvCpBWM
  • ECB's Makhlouf says it is too early to discuss the end of PEPP
  • Ever wonder if there are other chart types that can be sued for technical analysis? HLOC charts are discussed in the following article as well as their pros and cons. Learn more here: https://t.co/qV3c7a4YR3 https://t.co/9TD1uIcaGT
Gold Prices Retreat as Janet Yellen Backs Biden Stimulus, Higher Interest Rates

Gold Prices Retreat as Janet Yellen Backs Biden Stimulus, Higher Interest Rates

Margaret Yang, CFA, Strategist

GOLD PRICE OUTLOOK:

  • Gold prices pulled back slightly following Yellen’s comment about inflation and interest rates
  • A slight miss on nonfarm payrolls data alleviated tapering fears, but this may not last as wage growth accelerated
  • Mounting selling pressure seems to be found above the $1,900/oz resistance level

Gold prices pulled back slightly during Monday’s Asia-Pacific trade after rising over 1% on Friday. Market participants are assessing comments by Treasury Secretary Janet Yellen, who showed her support for President Joe Biden’s $4 trillion spending plans even if inflation persists into next year. She also added that a “slightly higher” interest rate environment would be a “plus” for the US, reigniting fears about tapering Fed stimulus. As a result, the 10-year Treasury yield rebounded nearly 1% to 1.569%, reflecting reflation hopes.

Real yield, as represented by the 10-year inflation-indexed security- edged 2bps higher to -0.86%. This dented the appeal of gold as the opportunity cost of holding it increased. The DXY US Dollar index also climbed modestly to 90.17, exerting downward pressure on gold. Both real yield and the DXY US Dollar index historically exhibit a negative correlation with gold, and their past 12-month performance can be viewed on the charts below.

Gold Prices Retreat as Janet Yellen Backs Biden Stimulus, Higher Interest Rates

Source: Bloomberg, DailyFX

Gold Prices Retreat as Janet Yellen Backs Biden Stimulus, Higher Interest Rates

Source: Bloomberg, DailyFX

Looking back at Friday’s close, a slight miss on May’s nonfarm payrolls data cooled fears about the Fed tapering stimulus and sent bullion prices 1% higher. Some 599k jobs were added last month, compared to a 650k baseline forecast. While the labor market participation rate remained largely unchanged, the unemployment rate fell to 5.8% from 6.1% in the prior month, hitting a pandemic-era low.

It is worth noting that wage growth climbed 2% YoY versus a 1.6% forecast, pointing to rising inflationary pressures that may lead to a debate among Fed officials about when to start scaling back the central bank’s bond purchasing program.

Looking ahead, Euro area GDP data and the ECB interest rate decision dominate the economic docket this week. Meanwhile, US inflation readings will also be closely monitored by traders for clues about rising price levels and their ramifications for Fed monetary policy. US headline inflation is expected at 4.7% YoY in May, hitting the highest level since 2008. A large deviation from this expectation may lead to heightened market volatility, especially for stocks, forex and precious metals.

Technically, gold prices extended higher within an “Ascending Channel” after completing a “Double Bottom” chart pattern. Prices breached above a key resistance level at $ 1,875 (the 50% Fibonacci retracement) and have likely opened the door for further upside potential with an eye on $ 1,922 (the 61.8% Fibonacci retracement). Selling pressure seems to be building above a psychological level of $ 1,900, which may be viewed as an immediate resistance. The MACD indicator formed a bearish crossover, signaling that a deeper pullback is possible.

Gold PriceDaily Chart

Gold Prices Retreat as Janet Yellen Backs Biden Stimulus, Higher Interest Rates

--- 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