- Gold is flat and sideways in consolidating markets awaiting a catalyst.
- US CPI and central banks are in focus while the greenback disconnects with US yields.
Update: Gold (XAU/USD) picks up bids to $1,785, consolidating early Asian losses during Thursday.
The bright metal initially dropped on firmer US Treasury yields while the latest rebound lacks major positives and hence seems tepid, waiting for more clues to convince bears.
The US 10-year Treasury yields rise 1.4 basis points (bps) to 1.52%, up for the fourth consecutive day, whereas S&P 500 Futures print mild losses at the latest as fresh coronavirus fears from the West challenge the previous optimism that the South African covid variant, dubbed at Omicron, is milder than the previous strains. Also weighing on the market sentiment and underpinning the US bond coupons, as well as testing the gold bulls, are the chatters over the US-China and Fed rate hikes.
That said, gold prices remain lackluster as traders await Friday’s US Consumer Price Index (CPI) data to confirm the latest jump in the Fed rate hike expectations.
End of update.
Gold, XAU/USD, is consolidating in the $1,779 and $1,793 range with markets trying to assess the outlook with regards to inflation, central banks and the uncertainty surrounding the Covid-19 variant.
In the Federal Reserve's blackout period, gold prices were little changed on Wednesday while the US dollar slid and offset firmer US Treasury yields ahead of this week's US Consumer Price Index. Investors are likely squaring their positions in the run-up to the key data.
''We expect inflation to slow significantly as fiscal stimulus fades and supply constraints ease, but we don't expect the data to be validating in the near term,'' analysts at TD Securities said.
''The CPI likely surged in Nov, with a drop in oil coming too late to avert another large gain in gasoline and core prices boosted by rapidly rising used vehicle prices and post-Delta strengthening in airfares and lodging.''
The data will be important for traders as the monitor for an acceleration in the pace of tapering by the Federal Reserve, potentially to start as soon as this month.
Hawks may call for a March hike if US November inflation data comes in higher than expected on Friday. Clues as to the probability of a March hike will then be provided by the Fed next week (Dec. 15), when it is expected to announce an accelerated tapering of its bond purchases. Meanwhile, the benchmark US Treasury yields climbed, dimming gold's appeal with the narrative shifting back to central banks' tightening policy, which was likely to boost the US dollar.
''With inflation prints expected to remain elevated in the early months of the year, the market's pricing for Fed hikes could still become more aggressive, but we expect that it will ultimately prove to be far too hawkish,'' analysts at TD securities argued.
''In fact, with both an accelerated taper and more than three rate hikes already priced in for 2022, the balance of risks for gold positioning remains to the upside, as geopolitical risks and virus risk could catalyze a positioning reshuffling.''
Gold technical analysis
The price of gold is stuck in familiar territory and the monthly chart illustrates that space is running out for the bulls. A break of the symmetrical triangle opens the risk of a breakout to the downside which could be potentially significant if $1,700 gives out.
From a daily perspective, the price needs to break beyond the $1,810 level for space to $1,850.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD holds above 1.0450 German sentiment data
EUR/USD stays in positive territory above 1.0450 after retracing a portion of its bullish opening gap. The data from Germany showed that the IFO - Current Assessment Index declined to 84.3 in November from 85.7, while the Expectations Index edged lower to 87.2 from 87.3.
GBP/USD pulls back toward 1.2550 as US Dollar sell-off pauses
GBP/USD is falling back toward 1.2550 in the European session on Monday after opening with a bullish gap at the start of a new week. A pause in the US Dollar decline alongside the US Treasury bond yields weighs down on the pair. Speeches from BoE policymakers are eyed.
Gold price manages to hold above $2,650 amid sliding US bond yields
Gold price maintains its heavily offered tone through the early European session on Monday, albeit manages to hold above the $2,650 level and defend the 100-period Simple Moving Average (SMA) on the 4-hour chart. Scott Bessent's nomination as US Treasury Secretary clears a major point of uncertainty for markets.
Bitcoin consolidates after a new all-time high of $99,500
Bitcoin remains strong above $97,700 after reaching a record high of $99,588. At the same time, Ethereum edges closer to breaking its weekly resistance, signaling potential gains. Ripple holds steady at a critical support level, hinting at continued upward momentum.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.