Market analyst Eren Sengezer states that with the sharp rise in the US Treasury bond yields, gold prices fell below the trading range of the previous week and continued their downward movement in the first half of the week. After falling to $1,778 on Wednesday, the lowest level since early November, gold prices made a decisive recovery ahead of the weekend and settled near $1,800. However, gold closed in negative territory for the second week in a row. cryptocoin.com We have prepared the developments in the market for our readers, accompanied by the analyzes and evaluations of Eren Sengezer.
What happened to the markets last week?
Benchmark The 10-year US Treasury yield gained momentum during the American session on Monday and rose more than 5% on a daily basis. The analyst states that in the absence of high-level macroeconomic data releases, the weak demand seen in the 2-year Treasury bill auction has increased the interest rates one more leg. Meanwhile, US President Joe Biden has announced that he has nominated Jerome Powell to head the Fed for a second four-year term, reinforcing his view that the Fed may raise interest rates until June 2022.
Data released by IHS Markit on Tuesday revealed that economic activity in the private sector continued to expand in early November, but at a softer pace than in October, with the Composite PMI falling to 56.5 from 57.6. However, the 7-year Treasury bill auction underscored bleak demand once again, and the 10-year U.S. T-bill yield continued to climb towards 1.7%.
The U.S. Bureau of Economic Analysis reported on Wednesday that the Core Personal Consumption Spending (PCE) Price Index rose to 4.1% year-on-year from 3.7% in October. Ahead of the Thanksgiving holiday, the dollar remained strong and did not allow gold to erase its losses. Meanwhile, San Francisco Fed President Mary Daly said there is a case for the Fed to step up tapering and said she wouldn’t be surprised if the Fed raises the policy rate twice next year.
After Thursday’s sluggish market action, gold rallied on Friday as investors shifted their focus to coronavirus headlines. Reports suggesting that current vaccines may not be effective against the highly mutated Covid variant detected in South Africa triggered flights to safety ahead of the weekend. Many countries have decided to temporarily suspend flights from several African countries, and Pfizer has announced that it will take about 100 days to produce a corrected vaccine.
Reflecting the gloomy market mood, global stock indexes suffered heavy losses and the 10-year US Treasury yield turned negative this week, losing more than 7% on Friday. Also, CME Group FedWatch Tool’s probability of the Fed not changing its policy rate until June 2022 rose to 34% from 18% earlier in the week.
What’s on the agenda for next week?
The Conference Board’s Consumer Confidence data will be released on the US economy on Tuesday. Investors will look for details surrounding the impact of high inflation on consumer sentiment. The analyst reminds that the ADP Employment Change and Wednesday’s ISM Manufacturing PMI will follow for fresh momentum ahead of Friday’s November jobs report. While a better-than-expected increase in Non-Farm Payrolls could provide a boost for the dollar, market response may be limited unless vaccine manufacturers reassure markets that they can control the new Covid variant.
Comments from FOMC policymakers will also be critical before the Fed enters the blackout on Saturday, Dec. The analyst says that if Fed officials refrain from suggesting that they should be patient in the face of renewed coronavirus fears, US T-bond rates could regain momentum and limit the rise of gold. On the other hand, the analyst emphasizes that if safe-haven flows continue to dominate financial markets, gold may continue to gain strength.
Gold prices technical outlook and gold sentiment survey
Market analyst Eren Sengezer states that on the daily chart, gold managed to close Friday above the 50-day, 100-day and 200-day SMAs, while the Relative Strength Index climbed above 50, showing that the sellers are on the sidelines for now, and pay attention to these technical levels. attracts:
On the upside, $1,815 (38.2% Fibonacci retracement of the latest uptrend) is aligned as initial resistance ahead of $1,825 (20-day SMA). Should the latter turn into support, gold could target $1,840 (Fibonacci 23.6% retracement). On the other hand, bearish pressure could increase below $1,790 daily close (50-day SMA, 100-day SMA, 200-day SMA) and cause gold to drop to $1,780 (Fibonacci 61.8% retracement) to $1,770 (static level).
The FXStreet Forecast Survey shows that gold is expected to remain in a consolidation phase around $1,800 in the near term, with the one-month outlook pointing to a slight uptrend.
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