Gold prices fall as Powell’s pivot raises Treasury yields. Will XAU / USD go down?

Gold, XAU / USD, US Dollar, US Dollar, Federal Reserve, Powell-Issues

  • gold The Federal Reserve seems ready to tackle high inflation, so it collapsed
  • U.S. dollar Round and round, but Treasury yields dominate gold and get higher
  • Real yields have risen due to lower inflation prices. Where is XAU / USD?

Gold prices fell after Federal Reserve Chairman Jerome Powell testified at the Senate Banking Commission. In his remarks, he dropped the reference to “temporary” inflation.

Powell said the economy is strong and inflationary pressures are high. At his next Fed meeting, he considered discussions on how to put together an asset purchase program months earlier than previously expected.

NS U.S. dollar The index (DXY) initially soared in comments, while gold fell. However, gold remained weak as DXY returned near before the testimony.

His remarks on accelerating the tapering of asset purchase programs have seen short-term government bond yields rise. The two-year yield jumps to about 12 basis points (bp).

Market price inflation calculated through the Treasury Inflation Protection Securities (TIPS) has been kept low as well. Inflation prices have fallen sharply since their peak in the middle of last month.

If all other conditions are the same, this has the effect of raising the Treasury’s “real yield.” This is the rate of return from the security minus the decline in inflation. This makes it a more attractive alternative to yellow metal.

With this in mind, yields appear to be a major driver of the current gold price outlook.

In other news, the Monetary Authority of Singapore (MAS) purchased 26.3 tonnes of precious metals in May and June this year, according to a report from Bloomberg.

From the beginning of May to the beginning of June, the XAU / USD moved to highs from 1770 to 1916. By the end of June, it was close to 1770.

Gold technical analysis

Gold could be bearish as it fell below last week’s lows and below all short-term, medium-term and long-term Simple Moving Average (SMA)..

SMA of 10, 21, 55, 100, 200, and 260 days is a possible resistance level. Further resistance can occur at the pivot points and the previous highs of 1778.69, 18.13.94, 1815.60, and 1834.14.

Support may be the previous lows of 1758.93, 1750.25, 1721.71.

chart NSRating on TradingView

— Written by Daniel McCarthy, strategist at

To contact Daniel, use the comments section below or @DanMcCathyFX On twitter

Gold prices fall as Powell's pivot raises Treasury yields. Will XAU / USD go down?

Source link Gold prices fall as Powell's pivot raises Treasury yields. Will XAU / USD go down?

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