XAU/USD stabilizes below $1,850 amid pre-Fed risk aversion and anxiety

Update: Gold prices (XAU/USD) remain under pressure around an intraday low around $1,836, mostly inactive early Friday.

The yellow metal is struggling for a clear direction after moving away from the key resistance line the previous day. In doing so, gold remains split between hawkish Fed expectations and bearish US Treasury yields, as well as the US Dollar Index (DXY).

That said, the greenback’s gauge is down 0.06% on the day while 10-year US Treasury yields fall for the third day in a row to recently hit around 1.77%, down 5.5 points. base (pb). The 0.6% intraday loss in S&P 500 futures and the disappointing performance of Asia-Pacific equities also illustrate the risky mood.

It should be observed that a lack of major data/events joining the metal’s pullback to clear key resistance could trigger the price’s lower move amid caution ahead of the week’s Federal Open Market Committee (FOMC). next.

End of update.

Gold (XAU/USD) extends Thursday night’s pullback from a two-month high, refreshes the intraday low around $1,838 in Friday’s Asian session. In doing so, the yellow metal bears the brunt of the risky mood even as US Treasury yields remain down.

The metal’s pullback from the 1-year resistance line could be linked to market fears over the US Federal Reserve (Fed)’s next moves amid recently mixed data and the policymaker’s willingness to act. .

That said, U.S. jobless claims rose to their highest level since late October and details from the Philadelphia Fed’s manufacturing survey also improved for January. However, US Treasury Secretary Yellen recently said in the CNBC interview: “Inflation has risen more than most economists, including me, expected and of course it is our responsibility with the Fed to fix it. And we go.”

While depicting the mood, 10-year US Treasury yields posted a second straight daily loss, down four basis points to 1.79% latest, while the S&P 500 Future fell 0, 30% intraday at press time.

It should be noted that news from the South China Morning Post (SCMP) regarding Sino-US ties should have helped market sentiment, but did not. The SCMP reported that China’s Yang Jiechi and US national security adviser Jake Sullivan were ready for a crucial meeting, but no date was given.

The yellow metal pushed past the year-old resistance line as the US Dollar trailed Treasury yields. However, the recent pre-Fed caution appears to be weighing on gold prices, which in turn may continue amid a lack of major data/events and the metal’s inability to clear the hurdle. key to the north.

Technical analysis

After breaking through a three-week-old resistance line on Wednesday, now supporting around $1,826, gold is pulling back from a one-year-old downtrend line around $1,850 amid RSI signals firmer and bullish MACD.

However, $1,850 isn’t the only key to opening the door for gold buyers, as the 61.8% Fibonacci retracement (Fibo.) of the January-March 2021 drop near $1,852, acts as a validation point for the rally targeting the late 2021 peak of $1,877.

Following this, the 78.6% Fibo. the level around $1,900 and the June 2021 peak of $1,916-$17 will be in focus.

Alternatively, pullback moves below $1,826 will take the quote towards the $1,800 threshold, but an ascending support line from mid-December near $1,798 will test gold sellers by the following.

Even if the price of gold breaks below $1,798, a five-month-old support line near $1,791-92 will be crucial as a clean break will not shy away from welcoming the bears.

In summary, gold bulls are approaching key resistance that could give them carte blanche.

Gold: daily chart

Trend: continuation of the expected increase

Richard L. Militello