Gold Price Analysis : Fed Appointment, Rate Hike Expectations & Strong USD Weigh On Gold

1. Gold Price Analysis: Fed Appointment,
Rate Hike Expectations & Strong USD
Weigh on Gold

2. Points To Be Discussed Today:
• Fundaments Weigh On Gold Despite Inflation
Concerns
• US Treasury Yields (2,5,10 and 30 year yields)
• Inverse Relationship Between Gold And The
US Treasury 10 Year Yield
• Gold Technical Analysis And Key Levels

3. Fundaments Weigh On Gold Despite
Inflation Concerns
• The precious metal has been on the wrong
side of a large move in recent days as it
struggles to halt mass selling which began on
November 22nd.
• After it was confirmed that the more
‘hawkish’ of the two main candidates, Jerome
Powell, would serve another term as
Chairman of the Federal Reserve Bank.

4. Fundaments Weigh On Gold Despite
Inflation Concerns - I
• While Powell is far from hawkish and has
actually proven to be one of the most dovish
Chairman in recent decades, he was viewed by
the market as being less dovish than fellow
candidate, Lael Brainard.
• As such, a renewed expectation of interest
rate hikes showed up in the treasury markets
with the 2, 5 and 10 year rates accelerating
past prior highs.

5. US Treasury Yields
(2,5,10 and 30 year yields)

6. The US Dollar Continues To Surge
• Additionally, the US dollar continues to surge
higher although it usually receives a lift when
treasuries rise however, the dollar has been
looking strong ever since breaking above the
95 handle on the US Dollar Index (DXY).
• The index serves as a gauge of dollar
performance as it is weighed up against a
handful of major currency pairs with
the Euro carrying the highest weighting.

7. Inverse Relationship Between Gold
And The US Treasury 10 Year Yield

8. CBOE Gold Volatility Index (GVZ)

9. The FOMC Minutes
• Keep an eye on core PCE data out later today
(4.1% YoY Oct - expected) as this may have an
indirect effect on the precious metal via the
treasury market.
• Then, much later, the FOMC minutes of the
November meeting is made available for
further insight into the decision to begin
tapering Fed asset purchases.

10. The Treasury Market

11. Gold Technical Analysis And Key
Levels
• The daily chart shows a clean and aggressive
break below the 1835 mark and the 38.2% Fib
level (1823) - taken from the 2020 to 2021 major
move - before somewhat settling below the
1800 psychological level just above
trendline support.
• The ascending trendline acting as support
remains the nearest challenge to a bearish
continuation and currently props the market up.
A break below would see the crucial zone of
support (1754- 1764) shift into focus.

12. Gold Bulls May Be Looking For An
Indication
• On the other hand, gold bulls may be looking
for an indication of an overreaction and may
look for a close and hold above 1800 however,
due to the size of the recent move and in an
attempt to avoid a sideways trading market
(between 1764 and 1835).
• It would be more prudent to wait for another
move above 1835 to reignite a bullish
narrative.

13. Gold Bulls May Be Looking For An
Indication - I

14. Gold Was Up
• Gold was up on Thursday morning in Asia, but
kept below the $1,800 mark after the minutes
from the U.S. Federal Reserve’s latest
meeting suggesting that the central bank could
accelerate asset tapering.
• Gold futures were up 0.47% to $1,792.75 by 9:42
PM ET (2:42 AM GMT), after falling to its lowest
level since Nov. 4 on Wednesday.
• The dollar, which normally moves inversely to
gold, inched down on Thursday.

15. The Fed’s Meeting
• The minutes from the Fed’s meeting, released
on Wednesday, showed that an increasing
number of Fed policymakers would be open to
speeding up asset tapering should high
inflation continue.
• Policymakers also signaled a willingness to
hike interest rates quicker than planned, if
needed.

16. GDP Grew 2.1% Quarter-on-quarter
• The U.S. also released data on Wednesday, ahead
of a U.S. holiday on Thursday.
• The data showed that GDP grew 2.1% quarter-
on-quarter in the third quarter and that
199,000 initial jobless claims were filed
throughout the week.
• Meanwhile, the European Central Bank (ECB)
must keep borrowing costs in check as the
coronavirus pandemic drags on and there is no
sign that inflation is getting out of control, ECB
board member Fabio Panetta said on Wednesday.

17. Gold Spot / U.S. Dollar

18. XAUUSD Chart

19. Gold Pullback After Fall

20. Gold Price Analysis: Fed Appointment,
Rate Hike Expectations & Strong USD
Weigh on Gold

21. Thanks for listening
Gold Price Analysis: Fed Appointment,
Rate Hike Expectations & Strong USD
Weigh on Gold