The Fed’s hawkish remarks evaporated the intraday gains in gold prices; 10-year US bond yields are expected to record the longest weekly rise since 1955; before the weekend, gold focused on Fed Williams and Evans ‘s speech.
U.S. bond yields rise, gold tumbles
On Thursday, gold prices soared for a while, but then pared back intraday gains and eventually closed down. Gold once again succumbed to a rise in U.S. bond yields and a counterattack in the U.S. dollar.
Yields on the 10-year U.S. Treasury note rose following hawkish comments from Fed officials. Minneapolis Fed President Patrick Harker said the Fed is likely to raise interest rates well beyond 4% this year, leaving open the possibility for further action if necessary.
On a weekly basis, the 10-year U.S. Treasury yield is poised for its longest weekly winning streak since 1955. Today is also the first time since May that markets have begun betting that the Fed may raise rates more than twice in 2023. None of this is a bullish sign for gold, which may explain the overnight reversal in gold prices.
The economic calendar is fairly light for the rest of the week. New York Fed President John Williams and Chicago Fed President Charles Evans are scheduled to speak at 21:10 and 21:40 GMT+8, respectively. Continued hawkish rhetoric is likely to continue to weigh on gold.
Gold trend technical analysis
Gold prices are now approaching the important support line at 1614 after the downward trend line since March continued to focus the market on the downside. Confirmation of a break below this important support (also the September low) could further expose the 123.6% Fibonacci extension at 1562. And that could leave the door open for a recovery to the downside.
How to grasp the huge profit space of the market after the breakthrough? The layout of gold trading needs to understand these risks!
Gold Price Chart Daily Chart
Charts drawn via Tradingview
IG Client Sentiment Indicator: Bearish Gold
Meanwhile, the IG Client Sentiment Indicator shows that about 82% of retail investors are net long in gold. The ratio of short to long positions is 1:4.5. The IG Client Sentiment Indicator is often used as a contrarian indicator, with retail bullishness suggesting a possible fall in gold prices. Compared with yesterday and last week, the number of short positions decreased by 0.62% and 3.21% respectively. This does not bode well for gold. (Translated by Lisa by Daniel Dubrovsky)
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