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Gold Weekly Technical Forecast: Gold Sinks to Crucial Level - Bulls Last Hope?

Gold Weekly Technical Forecast: Gold Sinks to Crucial Level - Bulls Last Hope?

Justin McQueen, Strategist

Gold Price Analysis and News

  • USD and Bond Yield Rally Weakens the Appeal for Gold
  • The Line In the Sand for Gold

USD and Bond Yield Rally Weakens the Appeal for Gold

Another week of losses for the (not so) precious metal, which is on course to post a 2% drop at the time of writing. The move is largely in line with the seasonally weak pattern for Gold. Alongside this, as we highlighted last week, the relentless rise in global bond yields and the recent surge in the USD has reduced the appeal for holding gold. Reminder, real yields have been the main determinant for the moves in gold, therefore as real yields continue to rise with the Fed showing little concerns regarding the rise, risks remain tilted to the downside.

The Line In the Sand for Gold

Another contributing factor that has weighed on gold has been the persistent outflows in gold-backed ETFs, which have reported their longest losing streak since December 2016. In turn, gold is now trading at arguably the last line of defence for remaining bulls at 1690. This level has so far stemmed further declines, however, with bounces lacking any real follow through, this level will undoubtfully come into play in the upcoming weak, whereby failure to hold opens to door to 1670 and 1650 below. On the topside, a close above topside resistance at 1760 (prior support, now resistance) will be needed to alter the technical landscape.

Gold Chart: Daily Time Frame

XAU Chart

Source: Refinitiv

Gold Mixed
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily -2% -13% -5%
Weekly -14% 3% -10%
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Looking ahead: Bond Markets Will Continue to Steal the Limelight

With the Fed now in the blackout period, the moves in the bond market and by extension the USD, will continue to garner attention for gold. In turn, US bond auctions will be in focus and even more so after the poor 7yr note auction at the backend of February, should the upcoming auctions follow a similar pattern, gold could be instore for yet another challenging week.

Bond Market Calendar

Source: DailyFX

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

DISCLOSURES