Gold prices
Gold prices have resumed the downward move after US bond yields spiked more than 4% on Tuesday. The spike in bond yields comes as markets start to drive money into the bond markets to take advantage of the increases in bond yields, and away from the non-yielding gold asset.
Presently, the charts seem to favour the bears, with price having slumped progressively since the all-time high of 7 August 2020.
Markets are in risk-on mood, as coronavirus vaccinations continue and have shown signs in Israel and the UK that they are effectively cutting down infection rates. Expectations of the passage of the $1.9trillion spending plan have also fuelled hopes of a global recovery. Safe-haven assets such as gold are starting to feel the heat.
However, losses in gold prices were capped as the USD is still seeing some weakness, despite a slight gain in the US Dollar index on the day. It may therefore be prudent to wait for clearance of key price levels before initiating trade moves, amid scanty economic data.
The gold price activity on the XAU/USD daily chart is now well defined. We have a large symmetrical triangle whose lower boundary is presently at risk, following today’s 0.89% decline. Today’s decline found support at the 1815.20 price level, and this has temporarily helped to maintain the triangle’s integrity.
However, a breakdown of the 1815.20 support also allows the triangle’s lower edge to give way. If this breakdown is confirmed, we could be set for a large measured move to the south, targeting a decline that could go all the way down to 1436.6. However, initial targets that are in line in the near term include the 1789.49, 1763.30, and 1699.43 price levels.
On the other hand, a recovery in gold price targets the 1815.20 resistance, with a further extension of this advance expected to touch off the 1850.23 and possibly 1881.68 price levels as well.
