Gold Prices React To The Fed, Yields & Non-farm Payrolls (NFP)

1. Gold Prices React To The Fed,
Yields & Non-farm Payrolls
(NFP)

2. Points To Be Discussed Today:
• Gold (XAU/USD) Talking Points
• Gold Technical Levels
• Gold (XAU/USD) Weekly Chart
• Gold Prices Are Currently Testing Trendline Resistance
• Gold (XAU/USD) Daily Chart
• Gold Prices Eye NFP Report After FOMC Steepens
Yield Curve, Drags USD

3. Gold (XAU/USD) Talking Points
• Gold prices edge higher as the probability of a 2021 rate hike dissipates.
• Taper tantrum-free Fed meeting places the employment report (NFP) at the
forefront of risk-sentiment.
• XAU/USD currently remains within the confines of key Fibonacci levels.
• In response to the Fed rate decision and the press conference that
followed, Gold prices recovered a portion of this week’s losses as investors
priced in a 2022 rate hike.

4. Gold (XAU/USD) Talking Points - I
• For Gold, Silver and other safe-haven assets that have a negative
correlation (move in opposite directions) to the US Dollar, slightly
less hawkish commentary from Fed Chair Jerome Powell saw Gold
and Silver edge higher as expectations of a 2021 rate hike
dwindled.
• However, higher yields may continue to support the US Dollar which
will may hinder gold's ability to climb higher.

5. Gold Technical Levels
• After rebounding off of the 61.8% Fibonacci retracement level of the 2020
move which continues to hold as long-term support at $1,680, Gold
bulls temporarily managed to drive prices back above $1,900 before falling
back towards the upper bound of the descending channel that has been
forming since prices peaked in August last year.
• With the formation of a Doji candle now appearing on the weekly chart at the
38.2% retracement level of the 2021 move, the NFP report is expected to be
the major risk event for the imminent move.

6. Gold (XAU/USD) Weekly Chart

7. Gold Prices Are Currently Testing Trendline
Resistance
• Meanwhile on the daily chart below, Gold prices are currently testing
trendline resistance which coincides with the 50-day moving
average (MA).
• At the time of writing, additional resistance currently remains at the
key psychological of $1,785 with support holding firm at the 50%
retracement of the 2020 move at around $1,762.

8. Gold (XAU/USD) Daily Chart

9. Gold Sentiment

10. Gold Bullish

11. Gold Prices Eye NFP Report After FOMC
Steepens Yield Curve, Drags USD
• Gold prices reacted to the upside following the Fed’s taper
announcement
• Bullion traders eye Friday’s non-farm payrolls report for next
directional move
• XAU/USD faces confluent resistance from key moving averages
• Gold prices moved higher following the Federal Reserve’s interest
rate decision Wednesday.

12. Gold Prices Were Falling
• The Fed opted to begin tapering asset purchases, a move
analysts have speculated over for months now.
• Bullion prices gained in response as the US Dollar moved
modestly lower.
• That was a reversal to the Fed announcement lead up when
gold prices were falling.

13. Gold Prices Were Falling - I
• The pullback in the Greenback was the most evident driver for XAU
strength.
• The DXY index fell overnight despite a pickup in Treasury yields.
• The short-end of the curve failed to keep pace with faster rising 10- and
30-year yields.
• That represents a steepening of the yield curve, which may suggests
markets largely interpreted the FOMC’s move as dovish – or at least less
hawkish than markets expected.

14. Upside In Gold Prices
• That helps explain some upside in gold prices, along with the softer US Dollar.
• Rate hike bets remained virtually unchanged following the taper
announcement from where they were prior.
• However, this Friday’s US job report may bolster rate hike bets if the headline
figure impresses.
• That would more than likely weigh on gold prices, as higher rates discourage
investors from holding the non-interest-bearing asset.

15. Gold Before The Main Event
• Analysts expect the NFP report to cross the wires at 450k for October.
• That is more than double the 194k September print. A better-than-expected
figure will strengthen the Fed’s progress in hitting its dual mandate (inflation is
already well above target).
• Alternatively, a poor print on Friday is likely to do just the opposite, which
would help gold.
• Tonight will bring initial jobless claims data.
• That will provide the last data print before Friday, making the figure a potential
mover for gold before the main event.

16. Gold Technical Forecast
• Gold is nearly half a percent higher overnight, but prices remain down on a
weekly and monthly basis.
• Bulls will look to clear the confluent 20- and 50-day Simple Moving
Averages (SMAs) before taking aim at the October high.
• The 26-day Exponential Moving Average is also adding a layer of
confluence to the SMAs.
• Alternatively, failing to break those levels could see gold add to its weekly
loss.

17. Gold Daily Chart

18. XAU/USD Weekly Trade Levels
• Gold prices are on the defensive for the second consecutive week with
XAU/USD down more than 1% ahead of New York close on Wednesday.
• The decline is now approaching longer-term uptrend support and the focus is
on a possible exhaustion-low in the weeks ahead.
• These are the updated targets and invalidation levels that matter on
the XAU/USD weekly technical chart.

19. Gold Price Chart - XAU/USD Weekly

20. Gold Prices React To The Fed,
Yields & Non-farm Payrolls
(NFP)

21. Thanks for listening
Gold Prices React To The Fed, Yields &
Non-farm Payrolls (NFP)