Gold, XAU/USD, NFPs, Treasury Yields, Fedspeak, Technical Analysis – Talking Points:
- Gold prices closed at highest since early September last week
- Fed may reiterate transitory inflation outlook, Powell in focus
- XAU/USD approaching key resistance as retail traders sell
Gold prices traded quietly as the new trading week began with the Asia-Pacific session. Treasury yields trimmed losses from Friday. The yellow metal closed at its highest since early September last week following fairly supportive fundamental developments. That would be the combined disappointment that hawks were looking for from the Reserve Bank of Australia, Bank of England and Federal Reserve.
The key takeaway between the three of them was their stance on inflation being transitory, cooling 2022 rate hike expectations. The 10-year Treasury yield closed at its lowest since late September. This is something that the anti-fiat XAU/USD likely took well advantage of. But, persistent strength in the US Dollar likely capped its upside potential.
Over the remaining 24 hours, gold prices will eye Fedspeak, including Chair Jerome Powell and Vice Chair Richard Clarida. This follows last Friday’s stellar non-farm payrolls report, which struggled to bring forward hawkish Fed monetary policy expectations in the wake of patient commentary around interest rates. Reiterating similar language may continue keeping yields at bay, supporting XAU/USD.
Check out the DailyFX Economic Calendar for more key events!
Gold Technical Analysis
On the 4-hour chart, gold prices broke above the 1813 – 1808 resistance zone, exposing the 1825 – 1834 zone above. The latter is made up of peaks from July. A bullish Golden Cross between the 20- and 50-period SMAs may form, opening the door to an upward technical bias. These lines may also come into play as key support in the event of a near-term decline.
XAU/USD 4-Hour Chart
Chart Created Using TradingView
Gold Sentiment Analysis – Bullish
According to IG Client Sentiment (IGCS), roughly 66% of retail traders are net-long gold. Downside exposure has increased by 10.30% and 48.34% over a daily and weekly basis respectively. We typically take a contrarian view to crowd sentiment. Since most traders are net-long, this suggests prices may fall. But, recent shifts in positioning are resulting in a bullish-contrarian trading bias.
*IGCS chart used from November 8th report
–— Written by Daniel Dubrovsky, Strategist for DailyFX.com
To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter
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