Gold (XAU/USD) Analysis, Price and Chart
- US bond yields are weighing on the precious metal.
- Horizontal support is under pressure and looks increasingly fragile.
Gold[1] printed a fresh eight-month low earlier in today’s session and the precious metal looks set to fall further if US Treasury yields resume their multi-month rally. The yield on the benchmark 10-year UST spiked to a session high of 1.61% yesterday, before sliding back to trade on either side of 1.50% after the latest UST 7-year auction revealed very weak demand. US Treasury yields have been on the rise over the last few months as investors increasingly price-in higher growth and inflation expectations down the line. Higher Treasury yields make gold less attractive as an asset class, while the current uptick in the value of the US dollar[2], buoyed by higher UST yields, also weighs down on the precious metal.
Looking at the daily chart, prior horizontal support around $1,764/oz. is being tested again and a break and open below this level will signal further weakness in XAU/USD[3]. Below here, an old area of prior resistance turned support around $1,743/oz. may prove temporary support ahead of $1,700/oz big figure support ahead of the 61.8% Fibonacci retracement at $1,689.7/oz. The CCI indicator shows the market just moving into oversold territory, but not excessively, while volatility remains fairly constant around $24.5 using the 14-day ATR.
Gold Daily Price Chart (June 2020 – February 26, 2021)
Client sentiment shows 86.57% of traders are net-long with the ratio of traders long to short at 6.45 to 1.We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Gold prices may continue to fall.Positioning is more net-long than yesterday but less net-long from last
