Fundamental view:

Gold fell to an eight-month low on Friday this week to its worst month since November 2016 as a stronger dollar and elevated U.S. Treasury yields hammered non-yielding bullion’s appeal. “Rising 10-year yields, along with the U.S. dollar moving higher, and we had a resurgence in risk appetite. All that was a very bad recipe for gold,” said an strategist.

The downfall was exclusively sponsored by a strong bid tone surrounding the US dollar, which tends to drive flows away from the dollar-denominated commodity. The USD added to the previous day’s solid gains led by a sharp rise in the US Treasury bond yields. The US bond market has been reacting to the prospects for a strong global economic recovery amid the progress in COVID-19 vaccinations and US President Joe Biden’s proposed $1.9 trillion pandemic relief package.              

The major economic events deciding the movement of the pair in the next week are ISM Manufacturing PMI at Mar 01, Fed Governor Brainard Speech at Mar 02, ADP Nonfarm Employment Change, ISM Non-Manufacturing PMI at Mar 03, Initial Jobless Claims, Fed Chair Powell Speech at Mar 04, and Nonfarm Payrolls at Mar 05 for US.

XAU/USD Weekly outlook:

Technical View:

Last week’s high was 0.61% lower than the previous week. Maintaining high at 1816.0 and low at 1717.3 showed a movement of 988 pips.

In the upcoming week we expect XAU/USD to show a bearish trend.  The Instrument is trading below the 200 Simple Moving Average and the MACD trades to the downside. A solid breakout below 1696.1 may open a clean path towards 1657.3 and may take a way down to 1597.4. Should 1794.9 prove to be unreliable resistance, the XAUUSD may raise upwards 1854.9 and 1893.7 respectively. In H4 chart Ascending Triangle breakout downside favors prospects of a bearish trend. Also to be noted bearish engulfing formation exerts the expectation of downtrend for the pair.