Gold Price Rise Hits A Wall On Hawkish Fed Comments, Key US Data Eyed

1. Gold Price Rise Hits A Wall On
Hawkish Fed Comments, Key US
Data Eyed

2. Points To Be Discussed Today:
• Gold Prices Retreated
• Gold Technical Analysis – Rally Stalls At
Former Support. Now What?
• XAU/USD Bounces Off Two-week Low, Fed
Rate Hike Bets To Cap Gains
• Gold Technical Outlook
• XAU/USD Off Weekly Lows, Recaptures
$1,840 Amid Risk-aversion

3. Gold Prices Retreated
• Gold prices retreated Friday as Fed Board
Governor Christopher Waller said he favors a
faster pace of tapering QE asset purchases.
• While echoing the US central bank’s party line on
inflation – linking it to supply-chain disruptions
and otherwise ‘transitory’ factors – Waller
worried aloud about embedding price gains into
wages.
• This might make for stickier reflation than the Fed
anticipates.

4. The Treasury Yield Curve
• This sparked an upshift in the markets’ expected
rate hike path, as priced into Fed Funds futures.
• Two full rate hikes were are now baked in for
2022 while the probability for a further three in
2023 has receded somewhat.
• The Treasury yield curve painted a similar picture:
the front end (3-month to 2-year rate spread)
steeped while the belly (2- to 5-year) and the
long end (5- to 10-year) flattened.

5. Gold Seems Likely To Suffer
• Looking ahead, November’s PMI survey data as
well as the Fed’s favored PCE inflation gauge are
in focus.
• A revised look at third-quarter GDP is also due.
• Taken together, these outcomes may inform the
extent to which price pressures threaten to
dampen the pace of economic recovery.
• If they spur on a further hawkish shift in US
monetary policy bets, gold seems likely to suffer.

6. Gold Technical Analysis – Rally Stalls At
Former Support. Now What?
• Gold prices pulled back from support-turned-
resistance at 1870.75, with negative RSI
divergence marking ebbing upside momentum
and setting the stage for a reversal.
• From here, a test of support anchored at
1827.51 may be pivotal: holding off sellers here
would paint the pullback as corrective within a
larger upward break, while a downward breach
confirmed on a daily closing basis may speak to
near-term capitulation.

7. Negative RSI Divergence

8. XAU/USD Bounces Off Two-week Low,
Fed Rate Hike Bets To Cap Gains
• Gold attracted some dip-buying on Monday and
stalled its recent corrective pullback.
• Fresh COVID-19 jitters underpinned the safe-
haven metal amid persistent inflation fears.
• Hawkish Fed expectations, elevated US bond
yields and stronger USD could cap gains.
• Gold reversed an Asian session dip to near two-
week lows and was last seen hovering near the
top end of its daily trading range, just below the
$1,850 level.

9. The Precious Metal's Appeal As A
Hedge
• The worsening COVID-19 situation in Europe turned
out to be a key factor that benefitted traditional safe-
haven assets and assisted the XAU/USD to attract some
dip-buying on the first day of a new week.
• Austria said that it would be the first country in
Western Europe to reimpose a full lockdown to tackle
rising infections, while Germany warned that it may
follow suit.
• Apart from this, persistent concerns about rising
consumer prices further underpinned the precious
metal's appeal as a hedge against inflation.

10. US Dollar & Gold Prices
• That said, hawkish Fed expectations and a stronger US
dollar might keep a lid kept a lid on further gains
for gold prices.
• In fact, the Fed funds futures indicate the possibility
for an eventual Fed rate hike move by July 2022 and a
high likelihood of another raise by November.
• The speculations were further fueled by Fed Governor
Christopher Waller's comments, saying that the US
central bank should speed up the pace of tapering to
give more leeway to raise interest rates.

11. The Dollar-denominated Commodity
• The prospects for an early policy tightening by
the Fed continued acting as a tailwind for the
US Treasury bond yields.
• This, along with the prevalent bullish
sentiment surrounding the US dollar, should
hold back traders from placing aggressive
bullish bets around the dollar-denominated
commodity.

12. Gold Technical Outlook
• From a technical perspective, spot prices
managed to find some support ahead of the
$1,834-32 strong horizontal resistance
breakpoint.
• This should now act as a key pivotal point and
help determine the next leg of a directional
move.
• A sustained break below would prompt some
technical selling and accelerate the fall towards
the $1,808-07 region en-route the $1,800 mark.

13. Gold Technical Outlook -I
• On the flip side, some follow-through buying
beyond the $1,850 level might trigger a short-
covering move and push gold towards the
$1,865 resistance zone.
• The next relevant hurdle is pegged near the
$1,875-77 area (multi-month highs), above
which the XAU/USD could aim to reclaim the
$1,900 mark for the first time since June.

14. XAU/USD Off Weekly Lows,
Recaptures $1,840 Amid Risk-aversion
• Gold is on the back foot on the approach to
prior resistance.
• XAU/USD could stage a deep correction if
$1,850 becomes resistance
• US dollar on form as European covid risks rear
their ugly head again.
• Gold is trading above $1,840, attempting a
recovery from an eight-day low of $1,839
amid the covid resurgence-led risk-off mood.

15. • Concerns over the renewed lockdown in
Europe due to another wave of coronavirus
rearing its ugly head, as the winter sets in,
dents the investors’ sentiment.
• However, the further upside appears limited
due to a broadly stronger US dollar alongside
the Treasury yields.

16. Gold Price Remains On In The Red
Zone - I
• Despite the rebound, gold price remains on in
the red zone for the third straight session,
having faced rejection at the critical $1,870
level in the previous week.
• The focus this week remains on the Fed
minutes to gauge the timing of a potential rate
hike, which could likely have a significant
impact on the non-interest-bearing gold.

17. Price Of Gold Is Lower
• The price of gold is lower despite the risk-off
mood. XAU/USD ended on Friday down some
0.70% falling from a high of $1,865.83 to a low of
$1,843.09.
• The greenback was favoured instead after Austria
said it would be the first country in Western
Europe to reimpose a full lockdown while
Germany said it could follow suit, sending the
euro lower and lifting the US dollar.

18. The Dollar Index
• The dollar index, which tracks the greenback
against a basket of six major currencies, was up
0.57% at 96.066 by the close, a touch lower than
an its16-month high of 96.266 printed mid-week.
• For the week, the dollar was up around 1% DXY.
• It has the edge as the market's expectations have
grown that interest rates will be hiked faster in
the United States.

19. The Fed's Asset
• For instance, Federal Reserve Governor
Christopher Waller said the Federal Reserve
should speed up the pace of tapering its bond
purchases to give more leeway to raise interest
rates from their near-zero level sooner than it
currently expects if high inflation and the
strength of job gains persist.
• Additionally, Fed Vice Chair Richard Clarida said it
"may very well be appropriate" to discuss
speeding up the Fed's asset purchase wind-down
when it next meets, on Dec. 14-15.

20. Gold Price Rise Hits A Wall On
Hawkish Fed Comments, Key US
Data Eyed

21. Thanks for listening
Gold Price Rise Hits A Wall On Hawkish
Fed Comments, Key US Data Eyed