Gold Higher As USD Tumbles on Bond Yield Sell-Off
Gold Breaks Out
Gold prices are on course to end the week firmly higher today as the yellow metal capitalises on the current bout of USD weakness. Some softer data last week first sparked the sell off, with US rate-hike expectations falling sharply for next month. The decline in USD was then amplified this week by unexpected moves from the US Treasury. Treasury secretary Scott Bessent announced that the government will more than double its bond purchases from $2 billion to over $4 billion, focusing on the 10-30yr portion of the market. Bond yields in that range plummeted as a result of the news, dragging USD lower. Many players have commented on the off-cycle nature of the move and implications this has for the USD outlook, reflecting the US govt’s concern with elevated bond yields.
Bullish Gold Outlook
Given the current backdrop of fresh liquidity support from the US govt and reduced Fed tightening expectations, gold prices look set to continue higher near-term as the Dollar remains under pressure. Market pricing for a September hike has plunged to around 35% from above 70% at the start of last week. If incoming US data highlights any further weakness, this could see pricing pulling back further, extending the USD decline and providing a platform for gold prices to push higher in the coming month.
Technical Views
Gold
The rally in gold has seen the market breaking out above the falling wedge pattern and above the 4,389.24 level. Price is now testing the 4,558.62 mark and with momentum studies bullish focus is on a continuation higher. Looking above, 4,762.97 is the next bull target to note.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.