Gold, XAU/USD, Bitcoin, Fed, Treasuries, Technical Analysis – Talking Points:
- Gold struggled rising despite USD and Treasury yield weakness
- Bitcoin climb may have offset the yellow metal’s upside potential
- XAU/USD breakout above resistance seems unconvincing for now
Anti-fiat gold prices spent most of Monday consolidating as the yellow metal’s upside momentum slowed. XAU/USD was also unable to capitalize on a weaker US Dollar and falling longer-term Treasury rates. The 10-year yield fell to its lowest in about 2 weeks. Dovish Fedspeak seemed to be the key fundamental driver behind the performance in the Greenback and bonds over the past 24 hours.
Cryptocurrencies received a boost though. Bitcoin rallied over 11 percent after Tesla’s Elon Musk tweeted about progress towards renewable mining. Mr Musk has been in the spotlight lately when it comes to cryptocurrencies. That is because Tesla recently stepped back on accepting Bitcoin as an alternative payment method for its electric vehicles due to environmental concerns, sapping demand for BTC/USD.
Gold has been in the spotlight as well during the general selloff in cryptocurrencies seen over the past couple of weeks. In fact, there have been rising curiosity in the inverse relationship between XAU/USD and BTC/USD as of late. Correlation does not imply causation however. Analysts from JPMorgan have been suggesting that that institutional investors are moving into gold as they ditch cryptocurrencies.
Over the next 24 hours, gold will likely see some volatility around US conference board consumer confidence data and Fedspeak. Richmond Fed President Thomas Barkin and Vice Chair Randal Quarles will be speaking. Ongoing dovish commentary that continues to reiterate patience when it comes to tapering may offer a supportive environment for the yellow metal. Gains in crypto could risk sapping gold’s potential though.
Gold Technical Analysis
Gold’s breakout above the 1863 – 1875 resistance zone and the falling trendline from August appears unconvincing. Doji candlesticks continue appearing, a sign of indecision that can precede turning points in established trends. Still, in the event of a turn lower, rising support from the end of March could maintain the near-term upward bias. Extending gains places the focus on the 61.8% Fibonacci retracement level at 1923.
XAU/USD Daily Chart
Chart Created Using TradingView
–— Written by Daniel Dubrovsky, Strategist for DailyFX.com
To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter
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