Gold (XAU/USD) Analysis, Price and Chart
- Gold sticking to Fibonacci and moving average guidelines.
- US Treasury yields may have dipped but they look set to move back higher.
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The price of gold is currently pushing towards a clutch of resistance levels after making a strong rebound over the last week. Support around the $1,675/oz. area held, aided by the 61.8% Fibonacci retracement level at $1,689/oz. and the subsequent rally has the precious metal nearing a cluster of resistance levels which may prove difficult to overcome.
One of the main drivers of the recent sell-off in gold has been the ongoing rise in US Treasury yields as the market continues to price in the inflationary effect of the US fiscal and monetary largesse. After hitting a recent 14-month of 1.75%, the yield on the 10-year UST has faded 10bps to currently trade at 1.65%. This move enabled gold to bounce back. The move lower in UST yields is unlikely to continue and a reversal higher is seen as when, not if, as the US spends heavily to fully re-boot its economy and drive down unemployment. Recent US data continues to point to faster than forecast economic expansion and if inflation is to be kept under control, higher interest rates will be needed, and maybe sooner than expected.