Gold (XAU/USD) Analysis, Price and Chart
- US Treasury yields will continue to grind higher.
- Daily gold[1] chart throwing out some interesting signals.
For all market-moving events and data releases, see the DailyFXCalendar[2]
The price of gold is finding it difficult to break a noted area of resistance and it is looking increasingly likely that support levels may be tested in the short- to medium-term. The precious metal is picking up a small bid of late as US tech stocks come under pressure, but while US Treasury yields continue to move higher, gold will have difficulty testing recent highs. The yield on the US 10-year touched 1.75% on Thursday, its highest level since January 2020, before fading to just below 1.70% today. The latest FOMC[3] meeting re-affirmed that the central bank will remain accommodative until unemployment moves sustainably towards 5% or lower and that interest rates are likely to remain unchanged through 2023. The bond market however has a slightly different view and yields look likely to rise further, and test the Fed, in the coming weeks and months.
Looking at the daily chart, Thursday’s candle just missed forming a ‘bearish engulfing’ pattern, a negative set-up and one that suggest lower prices ahead. The pattern would have been confirmed if Thursday’s candle closed ($1,735/oz.) below Wednesday’s open ($1,731.5/oz.).
Trading with the Bearish Engulfing Candle[4]
Gold will find resistance at $1,756/oz. (Thursday’s high), before the March high at $1,761/oz. and the 50% Fibonacci retracement level at $1,764.6/oz. In the current environment, gold may struggle to break these levels convincingly. The precious metal is back above the 20-day simple moving average, an indicator that has acted as resistance since early 2021 and if this remains the case, then a tightening trading
