XAU/USD Readies For A Fresh Upswing

1. XAU/USD Readies For A Fresh
Upswing

2. Points To Be Discussed Today:
• Gold Price Consolidates & Remains Undeterred
• Gold Price: Key Levels To Watch
• Gold Prices Shot Higher Overnight
• Gold Is Seen As An Inflation Hedge
• Gold Daily Chart & XAU/USD
• Gold Spot /US Dollar
• Gold Client Positioning
• Gold Trader Sentiment

3. Gold Price Consolidates & Remains
Undeterred
• Gold price consolidates the upside before
the next push higher.
• Gold remains undeterred by the global
tightening calls after hot US inflation.
• Gold price turns bullish on falling bond
yields, technical breakout.

4. Gold Price Continues To Benefit
• With hot US inflation bringing back rate hike
expectations on the table from the Fed and the
ECB, gold price continues to benefit from its
increased demand as an inflation hedge.
• Holiday-thinned market conditions are also
boding well for the bright metal, as attention
shifts towards Friday’s US Michigan Consumer
Sentiment data.
• In the meantime, expectations of global
tightening will continue to influence gold price.

5. Gold Price: Key Levels To Watch
• The Technical Confluences Detector shows
that gold price needs acceptance above the
previous day’s high of $1,869 to extend the
bullish momentum towards the daily R1 pivot
point, at $1,873.
• A firm break above the latter will open doors
towards $1,884, where the R3 monthly pivot
point aligns.

6. Gold Price: Key Levels To Watch - I
• Alternatively, if sellers manage to find a strong
foothold below the confluence of the Fibonacci
23.6%, the daily pivot point and weekly R2 pivot
at $1,859, the corrective pullback could gain
traction.
• The next downside target is seen at the previous
hourly low at $1,855, below which fierce support
around $1,850 will come into play.
• That area is the intersection of the R2 monthly
pivot point, the Fibonacci 38.2% level and the 5-
4hr SMA.

7. Here Is How It Looks On The Tool

8. Gold Prices Shot Higher Overnight
• Gold prices shot higher overnight as traders
digested a much hotter-than-expected
inflation print out of the United States. The
October consumer price index (CPI) revealed
the highest annual rate of inflation in over 20
years at 6.2% y/y.
• That was an 0.8% increase from last month’s
annual reading. Analysts expected a 5.8%
figure.

9. The US Dollar And Treasury Yields
• Traders bought up gold despite a corresponding
rise in the US Dollar and Treasury yields, which
typically work against XAU prices.
• The Treasury rout was hardly contained to the
United States, with spillover effects seen across
key government bond markets.
• The upward pressure on Treasury yields is
continuing through Thursday’s Asia-Pacific
session while gold prices level off.

10. The 10-Year Treasury Inflation-
Protected
• Real yields dropped, suggesting longer-lasting
inflation expectations may be metastasizing
across a wider segment of market participates.
• The rate on the 10-year Treasury inflation-
protected note hit a fresh post-pandemic low
following the CPI release.
• That widened the spread versus the nominal
yield, a measure referred to as a breakeven rate --
the market’s expectation for inflation over the
next 10 years.

11. Gold Is Seen As An Inflation Hedge
• Since gold is seen as an inflation hedge by a large
segment of traders, that may have been one of
the catalysts that sent prices higher.
• XAU bulls may believe the Fed has fallen behind
the curve on inflation too, which would likely lead
to the central bank having to play catchup.
• That leaves the door open for a period of
stagflation, as policymakers would have to
scramble to avoid runaway inflation and raise
rates quickly.

12. A Tailwind For Gold Prices
• Higher rates bode poorly for gold prices.
• However, the aforementioned scenario would
also likely cause a rout in the stock market.
• Increased volatility is traditionally a tailwind
for gold prices, with investors turning to the
yellow metal to diversify and tame volatility-
linked effects on their portfolios.
• This type of outlook plays out rather well for
bullion.

13. XAU/USD Broke Above Key Resistance
• XAU/USD broke above key resistance overnight, with
prices moderating just above the 1840 handle through
APAC early trading.
• A resumption higher will target the psychologically
imposing 1900 level, which hasn’t been traded at since
June.
• Former trendline support could pose resistance above.
• A pullback would have bulls looking to defend the
recently breached resistance level near 1830 – an area
that acted as resistance from July to September.

14. Gold Daily Chart

15. XAU/USD

16. Gold Spot /US Dollar

17. Gold Client Positioning

18. Gold Trader Sentiment
• IG Client Sentiment shows traders are net-
long Gold- the ratio stands at +1.87 (65.10% of
traders are long) – typically weak bearish
reading
• Long positions are3.82% lower than yesterday
and 21.50% lower from last week
• Short positions are 11.85% lower than
yesterday and 40.27% higher from last week

19. Gold Trader Sentiment - I
• We typically take a contrarian view to crowd
sentiment, and the fact traders are net-long
suggests Gold prices may continue to fall.
• Traders are more net-long than yesterday but
less net-long from last week. The combination
of current positioning and recent changes
gives us a further mixed Gold trading bias
from a sentiment standpoint.

20. XAU/USD Readies For A Fresh
Upswing

21. Thanks for listening
XAU/USD Readies For A Fresh
Upswing