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High Yield of US Treasuries Limits Opportunities for Gold Recovery

Gold is starting the new trading week with a weakening dollar, but high yields from US Treasuries continue to limit opportunities for recovery. Today, the yield on 10-year government bonds has climbed to a new multi-month high of 1.391%, competing well with gold and other precious metals.

The US Commodity Futures Trading Commission (CFTC) said Friday that hedge funds and money managers have significantly reduced their long gold positions on the COMEX over the past week and increased their purchases in silver. Today Silver, Platinum and Palladium are following gold and are showing intraday gains of more than 1%.

Against the background of a fairly strong decline in the price of gold in recent weeks, there has been an active growth in physical demand for precious metals. The strongest gains are seen in India, where prices have dipped to their lows since June 2020. Growth in demand for gold is also observed in other Asian countries.

Today there is no important news in the economic calendar that could have a strong impact on gold trading. Investors will be watching the situation on the markets and expect the speech of the head of the Fed, Jerome Powell. Tomorrow he will submit the Fed's semi-annual monetary policy report to the Senate Banking Committee.

A corrective movement develops on the chart after the price has updated the local minimum at 1765.00. The bearish trend remains the priority in the medium term. From the resistance levels of 1795.00 and 1825.00 we expect the downward movement to resume.

  • Resistance levels: 1795.00, 1825.00, 1870.00.
  • Support levels: 1765.00, 1750.00, 1719.00.

The main scenario is a decline from current levels.

An alternative scenario is a breakdown of resistance at 1795.00 and growth to 1825.00.

The current fundamental background is moderately negative. Consider selling at the levels of 1795.00 and 1825.00.

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