Jump to content

Gold Prices Eye 5-Year Treasury Auction as FOMC, PCE Approach


MongiIG

Recommended Posts

GOLD, XAU/USD, FOMC, TREASURY AUCTION, YIELDS, TECHNICAL OUTLOOK – TALKING POINTS

  • Gold prices gain overnight on haven flows as Wall Street volatility persists
  • Strong 2-year Treasury auction helped push yields lower, 5-year auction eyed
  • XAU/USD establishes support at former area of major resistance as prices rise
Gold Prices Eye 5-Year Treasury Auction as FOMC, PCE Approach

Gold prices held firm overnight despite a US Dollar that was charged on safe-haven flows amid a volatile New York trading session. US stocks managed to close in the green after a late-day rally, marking an impressive intraday turnaround. The broad risk aversion and volatility was the likely driver for bullion prices.

A healthy amount of buying in the Treasury market also helped gold by pushing yields lower across the short-end of the curve, while longer-dated yields trimmed losses as stocks rebounded. Bullion is sensitive to Treasury yields, as the metal is a non-interest-bearing asset. Treasury rates have risen sharply since early December, boosted by increasingly hawkish Federal Reserve rate hike bets.

However, those rate hike bets may have become too aggressive. An overnight auction of $54 billion in 2-year Treasury notes was met with strong demand on Monday in the United States. The auction saw the highest demand seen since early 2020. That suggests the hawkish bets calling for nearly four Fed rate hikes in 2022 may be overdone. This is a good sign for gold as higher demand for bonds raises the price. Bond yields fall when prices rise.

Bullion traders have a busy week ahead, with the Federal Reserve’s policy decision set to cross the wires on Wednesday. Federal Reserve Chair Jerome Powell may push back on some of the aggressive market pricing on rates during the post-FOMC press conference. Markets are currently pricing in nearly 100 basis points of hiking, which is likely more than the Fed is comfortable with currently despite the recent hawkish shift among even more dovish board members.

Later this week, the Fed’s preferred inflation metric, the personal consumption expenditures price index (PCE), is slated to drop. Analysts expect a reading of 4.8% year-on-year in the core segment of the price index for December. That would represent a small increase from November. It would also be prudent to keep an eye on the 5-year note Treasury auction tonight to help gauge overall bond demand. Another strong auction could help drive down rates on the shorter end of the curve. That would likely bode well for gold prices.

GOLD TECHNICAL FORECAST

Gold prices rose from a newly establish level of support, which served as resistance numerous times going back to July 2021. The next target for bulls is likely the November high at 1877.15. The RSI oscillator is in neutral territory, while MACD strengthens. Prices may require a bit more consolidation before the next big push higher. Alternatively, a move lower would aim for a quick show of support from the former resistance level.

GOLD DAILY CHART

gold chart pre fomc

Chart created with TradingView

 

Written by Thomas Westwater, Analyst for DailyFX.com. 25th Jan 2022.

Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • image.png

  • Posts

    • Imagine stepping into a world where every game you play is not just about entertainment, but about unlocking real rewards and experiences that resonate with you on a personal level. That's the magic of Game-Fi projects, where the boundaries between gaming and finance blur, creating an immersive universe where players are not just participants but pioneers of a new era. In the midst of this gaming revolution, there's a project that's been making waves for all the right reasons: NADA Protocol $NADA. Recently, I found myself diving deep into the realm of emerging Game-Fi projects, and NADA caught my eye like a hidden treasure waiting to be discovered. It's more than just another token; it's a symbol of possibility, offering gamers a glimpse into a future where their passion translates into tangible rewards. Let me take you on a journey through the world of NADA Protocol, where innovation meets excitement, and where every move you make could be the key to unlocking a world of endless possibilities. 1. Rewards Beyond Imagination: NADA Protocol isn't just another token; it's a ticket to a world where every move, every triumph, is rewarded. Imagine playing your favorite games and earning tokens simply for doing what you love. With NADA, that dream becomes a reality. 2. Trailblazing Roadmap: What sets NADA apart is its ambitious roadmap, charting a course towards a future where gaming and rewards intertwine seamlessly. With plans to integrate into future games, early adopters of the native token stand to reap massive rewards down the line. 3. Korean Innovation: Behind the scenes, NADA is powered by none other than NADA Digital Co., Ltd., a powerhouse in the Korean gaming industry. With a proven track record and global recognition, NADA Digital Co., Ltd. brings a level of expertise and reliability that sets NADA apart from the competition. 4. Global Validation: It's one thing to dream big, but NADA has the track record to back it up. With a presence in the global market and validation from players worldwide, NADA isn't just a promising project – it's a force to be reckoned with. 5. Exchange Expansion: The anticipation builds as NADA gears up for listing on top exchanges like Bitget. With increased accessibility and liquidity, NADA is poised to make waves in the Game-Fi space, captivating audiences and investors alike.  What are your thoughts, let's discuss? 
    • Hi There - Any update on this??? Or is it time to move my accounts to a platform that can provide DRIPs?
    • Hi There - Any update on this??? Or is it time to move my accounts to a platform that can provide DRIPs?  
×
×
  • Create New...
us