XAUUSD – Gold Driven by Falling Bond Yields


After the gold price fell heavily at the beginning of the week following Powell’s nomination to return to the position of Fed chair for a second term, gold has finally found support in the uptrend line around 1,780, and has now breached  1,800 on the risk-off mood that dominates markets today.

Even gold prices will be pressured by the appreciation of the Dollar and US economic data that came out on Wednesday, but the decline in bond yields this morning is supporting gold prices before the end of the week. The 10-year US yield today has dropped from 1.63% to 1.54%. The new wave of Covid-19 outbreaks in Europe and the US is another factor of uncertainty for this weekend that has pushed gold prices above 1,800 again as a safe haven asset.

From a technical point of view the price of gold remains in a bullish Chanel frame. Along with the trend reversal pattern of Inverted Head and Shoulder prices with key resistance (neckline) at 1,800, this corresponds to the movement of the RSI rising from the oversold zone. However, the break above 1,800, there is still more. One key resistance waits at the MA200 line at 1810. The MACD is in a downtrend and continues to move in the negative territory, though if the signal line has been cut up that means if the price fails to break above 1,800, it is ready to fall back to test the 1,780 low again.

The long Thanksgiving holiday can cause market volumes to drop, but this may be offset by the volatility of the uncertainty that may occur during the weekend. At 09:30 GMT  XAUUSD was trading at 1,806. 

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Chayut Vachirathanakit
Market Analyst – HF Educational Office – Thailand


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