based on technical analysis
The dollar index (DXY) reaches a peak surpassing 10 days
Yields on 10-Year Treasury notes surge beyond 4%
Gold values experienced a subdued Tuesday as the dollar strengthened, and Treasury yields ascended. Traders, in anticipation, awaited insights from various U.S. Federal Reserve speakers scheduled for the week, hoping for a clearer picture of the central bank’s stance on potential rate cuts.
Spot gold, often simply referred to as gold, witnessed a decline of 0.3%, settling at $2,049.07 per ounce as of 0617 GMT. Concurrently, U.S. gold futures displayed a modest increase of 0.1%, reaching $2,052.70.
The prominence of the dollar weighed heavily on gold, with the greenback gaining strength ahead of Christopher Waller’s imminent speech—an event anticipated to hold greater significance throughout the week, as observed by Matt Simpson, a seasoned analyst at City Index.
The dollar index (DXY) achieved a 10-day zenith, rendering bullion less appealing to holders of other currencies. Concurrently, yields on benchmark U.S. 10-year Treasury notes (US10Y) surpassed the 4% mark.
This week, at least six Federal Reserve officials are slated to address various forums. Fed Governor Christopher Waller, in particular, is scheduled to deliver a speech on the economic outlook before the Brookings Institution at 1600 GMT.
Matt Simpson opined, “Considering the market has factored in multiple rate cuts, Waller might feel inclined to push back. A retracement to $2,035 for spot gold could be plausible.”
Anticipations for the Fed’s Jan. 30-31 meeting lean towards a maintenance of the current policy rate.
Market speculations suggest the likelihood of six rate cuts of 25 basis points each in the coming year, with a significant chance of the initial cut materializing as early as March, according to LSEG’s interest rate probability app, IRPR. Lower interest rates tend to amplify the allure of non-yielding bullion.
In contrast, European Central Bank officials have resisted rapid rate cut expectations for the year, providing a counterpoint to prevailing market sentiments.
As per Reuters technical analyst Wang Tao, there exists a probability that spot gold might retrace to $2,042 per ounce, following repeated setbacks in breaching resistance at $2,060.
Spot silver (XAGUSD1!) experienced a 0.4% decline, settling at $23.10 per ounce. Platinum (PL1!) observed an 0.8% dip, reaching $907.66, while palladium (XPDUSD1!) recorded a marginal 0.2% decrease, closing at $969.14.