XAU/USD Slide Back Closer To $ 1750 Amid Rising Bond Yields, Stronger USD

1. XAU/USD Slides Back Closer To $1,750
Amid Rising Bond Yields, Stronger USD

2. Points To Be Discussed Today:
• Gold Stays Pressured Around Intraday Low
• Gold Struggled To Capitalize
• Gold (XAU/USD) Takes Offers
• US Dollar Index (DXY)
• Gold Remains Depressed
• Gold: Four-Hour Chart
• Gold: Four-Hour Chart & XAUUSD Chart
• Gold Price Talking Points

3. Gold Stays Pressured Around Intraday
Low
• Gold stays pressured around intraday low,
stretches pullback from two-week high.
• Market sentiment sours but Fed tapering
concerns, firmer US data underpin US
Treasury yields, DXY.
• US debt ceiling chatters, ADP Employment
Change will be the key, not to ignore China
headlines.

4. Gold Struggled To Capitalize
• Gold struggled to capitalize on the previous day's
modest bounce, instead met with some fresh
supply on Wednesday and dropped back closer to
the $1,750 level heading into the European
session.
• This marked the second successive day of a
negative move and was sponsored by the
continuous surge in the US Treasury bond yields,
which tends to drive flows away from the non-
yielding yellow metal.

5. The US Bond Yields
• The US bond yields resumed their uptrend
that has been underway since late September
when the Fed signalled that it would begin
tapering its monthly bond purchases by the
end of 2021.
• In fact, the yield on the benchmark 10-year
US government bond shot to 1.573% or the
highest level in over three months during the
early part of the trading action on Wednesday.

6. A Fed Interest Rate Hike In 2022
• This, along with rising bets for a Fed interest
rate hike in 2022, underpinned the US dollar
and exerted additional pressure on the dollar-
denominated gold.
• Meanwhile, worries that the continued surge
in crude oil/energy prices will stoke inflation
and derail the global economic recovery
tempered investors' appetite for perceived
riskier assets.

7. The Equity Markets
• This was evident from a generally weaker
tone around the equity markets, which could
act as a tailwind for the traditional safe-haven
gold.
• This, in turn, warrants some caution for
bearish traders and before positioning for any
further depreciating move.

8. Gold (XAU/USD) Takes Offers
• Investors might also be reluctant to place any
aggressive bets ahead of the closely-watched US
monthly jobs report – popularly known as NFP –
scheduled for release on Friday.
• Gold (XAU/USD) takes offers around $1,755,
down 0.30% on a day, ahead of Wednesday’s
European session.
• In doing so, the precious metal drops for the
second consecutive day as risk-off mood favors
the US dollar.

9. US Dollar Index (DXY),
• US Dollar Index (DXY), a gauge of the
greenback versus major currencies, also keeps
the previous day’s rebound near 94.05, up
0.06% on a day by the press time.
• In doing so, the DXY takes clues from the
firmer US 10-year Treasury yields, up 1.6 basis
points (bps) near 1.547% at the latest.

10. The Market Sentiment Remains
Cautiously Optimistic
• It’s worth noting that the market sentiment
remains cautiously optimistic, mildly weak of late,
amid anxiety over the US stimulus and the debt
limit extension, not to forget cautious mood
before Friday’s US Nonfarm Payrolls (NFP).
• US President Biden stays determine the tackle the
key budget and relief package issues before the
October 18 deadline despite the GOP rejection.

11. The Market Sentiment Remains
Cautiously Optimistic - I
• The Democratic Party member recently said,
per Reuters, “A carve-out of the filibuster for
the debt limit is a real possibility.”
• On the positive side, Moody’s intact US credit
rating and Biden’s readiness to ease
infrastructures spending bill’s cap keeps the
market players hopeful.
• However, Republicans are firm on their
demands and challenge the optimism.

12. US Trade Representative’s (USTR)
Investigation
• Elsewhere, the news of the US Trade Representative’s
(USTR) investigation over the exclusion of China
imports joins US President Biden’s phone call with his
Chinese counterpart and readiness to respect the
Taiwan agreement to challenge the pessimists.
• It’s worth mentioning that the Fed tapering chatters
gained momentum after firmer US PMIs as well as
hawkish comments from the US Federal Reserve (Fed)
policymakers, which in turn support the US Treasury
yields while weighing on the stock futures.

13. The Record Trade Deficit In The US
• Though, the record trade deficit in the US and
recent challenge from the covid Delta variant,
not to forget financial risks emanating from
China, poke the hawks.
• Though, the record trade deficit in the US and
recent challenge from the covid Delta variant,
not to forget financial risks emanating from
China, poke the hawks.

14. Gold Remains Depressed
• Gold remains depressed between 200-EMA and
50-EMA, flirting with a one-month-old
descending trend line of late.
• Given the MACD line’s bearish cross and a
descending RSI line, the bullion prices are likely to
witness further downside pressure.
• However, a clear break of 50-EMA and three-
week-old horizontal support, around $1,755,
becomes necessary for the gold sellers to tighten
the grips.

15. Gold Remains Depressed - I
• Following that, September’s bottom surrounding
$1,721 will be in focus.
• Alternatively, an upside run-up past $1,774,
comprising 200-EMA, will aim for $1,787 before
directing gold buyers toward the $1,800
threshold.
• It’s worth noting that the mid-September swing
high and the last monthly peak, near $1,808 and
$1,834 act as tough barriers for the precious
metal to cross past $1,800 if the bulls need to
reclaim the fort.

16. Gold: Four-Hour Chart

17. Gold Spot/ U.S. DOllar

18. XAUUSD Chart

19. Gold Price Talking Points
• The price of gold struggles to retain the
advance from the September low ($1722) as
the 10-Year Treasury yield climbs to a fresh
monthly high (1.57%).
• And key developments coming out the US
may continue to drag on the precious metal as
the Non-Farm Payrolls (NFP) report is
anticipated to show a pickup in job growth.

20. XAU/USD Slides Back Closer To $1,750
Amid Rising Bond Yields, Stronger USD

21. Thanks for listening
XAU/USD Slides Back Closer To $1,750
Amid Rising Bond Yields, Stronger USD