Gold, XAU/USD, Treasuries, US Dollar, RBA Minutes, Earnings Season – Talking Points:
- Gold prices consolidated as USD fell, Treasury yields rose
- RBA minutes likely boosted bond yields during APAC trade
- The technicals seem to favor near-term XAU/USD strength
Recommended by Daniel Dubrovsky
How to Trade Gold
Gold prices netted little changed over the past 24 hours as the precious metal contended with opposing fundamental forces. Treasury yields rallied during the European and North American trading sessions, but the haven-linked US Dollar struggled to capitalize on this despite a risk-off tone from equities.
Gold is a non-yielding asset that is largely priced in US Dollars in financial markets. Thus, its performance can largely depend on how news impacts Treasuries and the Greenback. Bond yields and the US Dollar moved inversely on Monday, opening the door for XAU/USD to finish close to where it started.
A similar dynamic unfolded during Tuesday’s Asia-Pacific trading session. Treasury yields climbed but the US Dollar weakened. News that the Reserve Bank of Australia could perhaps start tapering parts of its emergency lending facilities by the end of June may have reverberated into US bonds.
Heading into the remaining 24 hours, all eyes will continue to be on first-quarter earnings amid a lack of key economic data during the Wall Street session. Netflix will be reporting during afterhours. As such, gold may see directionless trade as bond yields and the Greenback diverge.
Gold Technical Analysis
From a technical standpoint, things do appear to be looking near-term bullish for gold. Not only has the precious metal confirmed the break above a bullish Falling Wedge, but also a ‘Golden Cross’ may soon form as the 20-day Simple Moving Average crosses above the 50-period. Key resistance seems to be at 1816.
XAU/USD Daily Chart
–— Written by Daniel Dubrovsky, Strategist for DailyFX.com
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