Friday , October 22 2021

The XAU / USD failure at $ 1,800 brought the bears under control



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  • Gold breaks below $ 1,800, bears target $ 1,700.
  • 10-year US fund yields are rising, supporting demand for the US dollar.
  • Fed speakers this week agree on the prospect of a bond cut this year.

Gold fell during the New York session, trading at $ 1,789.08, down 0.30% at the time of retirement. Meanwhile, US 10-year bond yields, which were imposed on Thursday in a sad 30-year bond auction, recovered four basis points (bps) up to 1.341%, raising the currency. The US dollar index, which tracks the performance of the dollar against six currencies and affects the price of commodities, is up 0.05% at 92.57.

Earlier in the day, the US dollar was trading at around 92.36. However, rising yields and a mixed market climate have supported demand for the banknote, causing the metal to fall without yield.

Fed speakers all week referred to the start of declining assets. On Tuesday, the Fed of James Louis Bullard and the Fed of New York John Williams agreed that the decline in QE would begin later in the year. Although the markets are familiar with the harsh attitude of James Ballard, the NY Fed’s John Williams surprised a bit, implying that Jerome Powell tends to take the same stance.

On Thursday, Atlanta Fed Chairman Rafael Bostic commented that it would be appropriate to cut the bond-buying program sometime this year, adding that he sees the economy in a fairly strong position.

Clarifying the Fed’s parade this week was Cleveland Fed’s Loretta Mester. On Friday, Mester said it sees upside risks to inflation forecasts and that it would be comfortable to reduce the incentive in the first half of 2022.

XAU / USD Price Forecast: Technical Perspectives

Daily chart.

Gold is trading below its main daily moving average, indicating that yellow metal is on a downward trend. XAU / USD’s failure to reclaim $ 1,800 could pave the way for further losses. The first demand area would be the low on August 19 at $ 1,774.21. Once the latter is cleared, the next drop in support is the August 10 low of $ 1,717.79. A decisive break there could push the price to try the 2021 low at $ 1,676.86.

On the other hand, if the XAU / USD demands $ 1,800 again, the gold bulls could catch their breath. The inefficient metal will then have to wait for a new catalyst that could give it direction.

4 hour chart.

In this time frame, the action of gold prices has broken the 200 simple moving average (SMA) down, maintaining the declining bias. A break below the September 8 low at $ 1,782.47 could expose the August 19 low to $ 1,774.21. In case of violation of this level, the following key demand areas would be the low swing levels of August 12, around $ 1,742, followed by the low of August 10 at $ 1,717.79.

On the other hand, if the XAU / USD bulls claim the 200-SMA, their next target will be the 100 and 50-SMA, with $ 1802.36 and $ 1,809, respectively.

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