The yellow metal is on a bearish trend as the control after Fed Chair Jerome Powell downplayed the recent turmoil in the bond market. Powell said that the recent bond market will create nervousness which disappointed markets and triggered a renewed uptick in the US dollar alongside the Treasury yields. After that Gold and stocks suffered.
Along with that, with the US $1.9 trillion stimulus is now just a step away from the Senate approval, Treasury yields could continue with its surge, exacerbating the pain in the non-yielding gold. The next risk for the yellow metal is the US NFP release, which could shape the market in the next week.
Powell on Thursday repeated his pledge to keep credit loose and said although the rise in yields was “notable”, he did not believe the Fed will have to intervene to bring them down.
Elsewhere, Italy blocks Australia’s 250K AstraZeneca vaccine jabs while terming the OZ nation “non-vulnerable” as per the latest EU governing rules.
The Wall Street benchmarks dropped below 1.0% each whereas US 10-year Treasury yields rise to 1.569%, the fresh high since February 2020 and the dollar surged to three-month highs. Higher yields increase the opportunity cost of holding non-interest paying bullion.
Looking forward, global markets are likely to witness the pre-NFP trading lull unless American policymakers offer any major progress on the covid stimulus voting in the Senate. Also of significance is the coronavirus (COVID-19) updates and vaccine news that has flashed fresh risks off-late.
XAU/USD 4 Hour chart:
Support: 1683.3 (S1), 1670.5 (S2), 1650.5 (S3).
Resistance: 1716.1 (R1), 1736.1 (R2), 1748.9 (R3).
The greenback seems to be in the lime light creating pressure on the yellow metal and we expect a bearish trend for XAU/USD.
