According to market analyst Anil Panchal, the gold price is feeling the gravity as it drops from daily highs after being rejected once again at $1,790. The recent decline in the gold price can be attributed to the rise in US Treasury rates, aided by optimistic risk sentiment. The analyst states that the US inflation data released on Friday supported interest-free gold, easing concerns about the Fed’s aggressive rate hikes.
Gold focuses on Fed policy decision for a new direction
From a broader perspective, the analyst states that the gold price has extended its sideways course between $1,770-$1,795 seen last week, and markets continue to focus on the Fed policy decision for a new direction in the shiny metal. According to the analyst, the yellow metal benefited from US inflation data the previous day, but market anxiety ahead of key central bank meetings and virus fears are pushing buyers late. However, the analyst notes that the options market remains bearish on the commodity, according to weekly risk reversals (RR).
cryptocoin.com As we reported, the US Consumer Price Index (CPI) hit a 39-year high but matched market forecasts of 6.8% YoY for November. Stable inflation expectations, announced via the University of Michigan Consumer Sentiment Index, also added to the previous rally of relief. However, the analyst reminds that the RR, an indicator of sell calls, shows a five-week downtrend with the latest figures of -0.1000.
“Gold prices are likely to remain under pressure”
Meanwhile, Friday’s consolidation helped equities and put pressure on the US Dollar Index (DXY), as well as US Treasury yields. Still, markets are cautious as the key week begins, which includes the US Federal Reserve’s (Fed) monetary policy meeting.
Gold prices are likely to remain under pressure, given growing fears of the Fed’s rush for faster tapering and rate hikes, the analyst said. However, the analyst states that if the golden bears aim to establish more dominance, the US 10-year Treasury yields should continue the recent recovery.
Against this background, key US Treasury bill coupons rose 1.49%, while S&P 500 Futures were up 0.20% at press time. In addition to Fed woes, it’s also important to watch for Covid updates and the US-China struggle for clear direction on Monday’s light calendar.
Gold price technical analysis: Gold buyers lurk
Market analyst Anil Panchal says that while a clear break of the previous support line on September 30 precedes sustained trading below the 100-SMA and 200-SMA, gold buyers are lurking around a four-month ascending trendline. The bears are likely reducing their strength, given the diminishing bearish bias of the MACD signals and the mostly stable RSI. Anil Panchal points out the following technical levels:
However, the DMAs indicated near $1,790-$95 and the resistance line turning into support near $1,800 will keep the bulls at bay.
In addition to the upside filter, the analyst reminds us that the $1,815 level and the highs marked around $1,834 in July and September were found. Otherwise, a downside break of the multi-day support line close to $1,769 at the latest would need confirmation from the 61.8% Fibonacci retracement in the August-November period to convince gold sellers. Anil Panchal summarizes his analysis as follows:
To summarize, the gold price shows the indecision of the traders as the critical week begins.
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