In Asia on Friday, gold prices dropped to their lowest level since June 2020. The precious metal came under pressure due to the strengthening of the dollar and strong growth in the yield of US Treasuries a day earlier.
On Thursday, the yield on 10-year US government bonds jumped to 1.614%, updating the annual trading high. Today, the yield dropped below 1.5%, but the US dollar strengthened significantly. Since the beginning of the day, the dollar index has risen by almost 0.3%. Against the background of significant fluctuations in the dollar exchange rate and the yield curve of US government bonds, gold is under serious pressure and maintains a medium-term downtrend.
The rapid growth in the yield on US government bonds is not yet a concern for the Fed. On the eve of the head of the Federal Reserve Bank of St. Louis James Ballard said that the growth of Treasury yields is a good signal. Such statements have further weakened investor interest in gold.
Following gold, other precious metals were also under serious pressure. Silver today has fallen in price by more than 2%, palladium and platinum have lost about 1% of their value.
In the economic calendar today, it is worth paying attention to the publication of data on the price index of personal consumption expenditures. In light of recent events (statements by the Fed on inflation and growth in Treasury yields), this data may have a strong short-term impact on the dynamics of the market.
The chart is still dominated by bearish signals, but after renewing the multi-month low at 1760.00, traders may start fixing short positions, which could trigger the development of a corrective wave.
The main scenario is a correction to the area of 1780.00.
An alternative scenario - consolidation below 1760.00 and a decline to 1750.00.
The current fundamental background is neutral. We consider longs with very moderate risks from the level of 1760.00.
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