Gold prices
Gold price took a further hit on Monday, as US Treasury yields on the 10-year note tracked up once more during the New York session. The US 10-year Treasury Note was up 1.18% as of the time of writing, as investors have begun to bet that infrastructure spending plans due to be announced this week by the US government would produce a faster-than-expected economic recovery and drive up inflation expectations.
The US President Joe Biden is due to unveil plans of infrastructure spending under his administration, which could see as much as $4 trillion being spent on roads, bridges and initiatives to combat climate change. The initiative could drive up the budget deficits, which would need to be bridged. Issuance of bonds has traditionally been a funding gap used by governments to bridge such deficits, and if this were to be done in the US, the cost of bond notes (bond yields) could rise a lot more.
Gold price on the XAU/USD has pushed lower on the development, losing 1.23% in the session so far.
The active daily candle’s bearish violation of the 1719.13 resistance has made the next downside target at 1699.43 all the more viable. This descent comes off the descending resistance trendline that connects the highs of gold price action on the XAU/USD daily chart from February 2021 to date. If gold price can break the 1699.43 support, 1680.59 becomes a new target.
Bulls would be hoping on the ability of 1699.43 being able to serve as a pivot for a rebound, which targets 1719.13. This move is conditional; the descending trendline needs to give way. 1741.01 and 1763.30 are potential upside targets. Bulls may also derive some hope if the price bounces off 1680.59, forming a potential double bottom which could serve as a springboard for recovery.
