Gold rallies despite rising bond yields

골드 managed to snap its two-week losing streak last week, rebounding higher to the $1850 level, despite a relative stabilization of the greenback 그리고 hawkish calls from various Fed officials that reinforce the view that the US central bank will need to press on with its restrictive monetary tightening efforts to combat persistent inflationary pressures. In this report, we aim to shed light on the catalysts driving the precious metal’s price, assess its future outlook and conclude with a technical analysis.

Fed Chair Powell’s testimonies capture the market’s attention

Today Tuesday the 7  of March and tomorrow Wednesday the 8 , market participants will shift their attention towards Fed Chair Powell’s speeches at the Senate Banking Committee and House of Financial Services Committee respectively, seeking for clues as to how high the bank will raise rates to tackle the inflationary problem. The head of the Federal Reserve will testify at the hearing on the central bank’s semiannual monetary policy report and according to a WSJ article Powell “will likely be asked by lawmakers if a half percentage-point move is under consideration”. Currently the according to the latest FFF, the market assigns a 77% probability to the scenario where the central bank proceeds with a 25-basis points rate hike in the March meeting. Should the Chairman signal that a 50-basis points hike is a possibility and delivers his message with a hawkish resolve, that will force the market to readjust its stance, hence we may see the dollar receive inflows which might it turn cause the precious to relent some of its recent gains. The prospects for tighter financial conditions from the Fed, dampen the appeal of the shiny metal in the eyes of investors. Throughout last week, several FOMC policy makers expressed their views on how the bank should proceed going forth, taking into account the latest round of economic data. San Francisco Fed President Daly over the weekend commented “restoring price stability is our mandate and it is what the American people expect. So, the FOMC remains resolute in achieving this goal,” adopting a hawkish stance, siding with a more aggressive response as the latest PCE data pointed out that inflation is not subsiding as quickly as one hoped. Minneapolis Fed President Kashkari stated that he remains “open minded” and prefers over-tightening rather than under-tightening when it comes to monetary policy actions. Fed Governor Waller pointed out that a resilient employment market, strong consumer spending tendencies and hotter than anticipated inflation is not reflecting “moderation” or evidence for a cooling economy, stating “we cannot risk the revival of inflation”, signaling that more must be done.

Crucial US employment report to make or break gold

This Friday the market will be forced to grapple with the latest employment results for the month of February, following last month’s blowout report that drove traders to downsize their overoptimistic speculative bets for a less hawkish Fed, which yielded significant inflows towards the greenback and tarnished the precious. According to forecasts the market expects the Non-Farm Payrolls figure to ease to 200k this month, following the incredulous 517k newly created jobs in the month of January. Should the actual figure match the expectation we may see the dollar coming under pressure and in contrast see gold receive support. Worth pointing out nonetheless, is that the 200k employment figure expectation falls in line with historical averages, implying that the US labour market remains robust and showcases its ability to stand strong amidst a high interest rate environment. Turning our attention towards the unemployment rate expectation, the market consensus sees the rate holding steady at 3.4%, near record lows which validates the view for a resilient US employment force. In regards to the year-on-year average hourly earnings rate, the market forecasts an acceleration of the rate to the 4.7% from the 4.4% of the prior month and should the actual rate meet expectations that would practically reaffirm that inflationary pressures pose a systemic risk in the US economy, providing therefore support for the dollar and placing pressure on the shiny metal. Overall, the results are expected to provide support in the Fed’s case for pressing on with more rate hikes since the employment market has yet to show any cracks, allowing the central bank to focus solely at keeping the inflation monster suppressed and under control, disallowing it from becoming deeply entrenched in the US economy. Should we see the NFP figure exceed expectations, that would reinforce the view for a hawkish policy response from the Fed and hurt the precious, since the prospects for tighter financial conditions dampen the appeal of the shiny metal. On the contrary should the NFP figure fail to live up to expectations, we may see the bullion glisten in the eyes of investors.

기술적 분석

XAUUSD H4 Chart

• Support: 1835 (S1), 1820 (S2), 1805 (S3)
• Resistance: 1855 (R1), 1870 (R2), 1890 (R3)

Looking at XAUUSD 4-hour chart we observe that gold broke past the descending channel on the 28  of February and soared higher, peaking around the 1855 (R1) resistance level and is currently attempting consolidation near the 100- and 200-day moving averages. We hold a sideways bias given that the price action has broken below the ascending trendline initiated since the 28  of February, with its price action being confined between the 1835 (S1) and 1855 (R1) levels. The RSI indicator currently registers a reading of 51, showcasing indecision surrounding the commodity. We would also like to point out that today’s and tomorrow’s scheduled speeches by Fed Chair Powell alongside the crucial NFP report on Friday, can sway the markets views and create 변동성 for the shiny metal’s price, depending on the comments and contents respectively. Should the bulls take initiative and guide the price of gold, we may see the definitive break above the 1855 (R1) resistance level and the move near the 1870 (R2) resistance barrier. Under extremely volatile conditions we may see the price climb higher, near the 1890 (R3) level. Should on the other hand bears dominate, we may see the break below the 1835 (S1) support level and the move near the 1820 (S2) support base. Similarly, we note that under extremely volatile conditions we may see gold plunging even lower, closer to the 1805 (S3) support level.

책임 고지:
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