Gold (XAU/USD) Analysis: Anticipating Upside Momentum in Quiet Markets, Unfazed by Elevated US Bond Yields
In the current subdued market environment, gold is showing a modest uptrend, aiming to re-test significant levels at both $2,000/oz. and the recent multi-month high, just below $2,010/oz. Despite the rise in US government bond yields, the precious metal is holding its ground today, albeit with potential distortions due to low trading volumes.
The primary data release for the day, the flash S&P PMIs at 14:45 UK time, might introduce some volatility. However, overall market conditions are expected to remain quiet until the beginning of the next week.
US Treasury bond yields are experiencing a gradual increase, with the 2-year yield now at 4.95%, marking a 15 basis points rise compared to one week ago. Looking ahead, the upcoming week is set to witness substantial short- to medium-term US Treasury (UST) issuance, totaling $148 billion in 2s, 5s, and 7s. Traders are seemingly driving yields higher in anticipation of these auctions, aiming to maximize their returns.
The daily gold chart retains a positive outlook and another test of the recent high is looking likely. The 20-day simple moving average is now acting as support, along with the 50- and 200-day smas, while a prior level of note at $1,987/oz. has also been supportive in this week. Below here, support is seen from the 23.6% Fibonacci retracement level at $1,972/oz. If resistance is broken convincingly then $2032/oz. and $2049/oz. come into play.
The daily gold chart maintains an optimistic outlook, signaling a probable retest of the recent high. Essential support is provided by the 20-day simple moving average (SMA), complemented by the 50- and 200-day SMAs. Notably, a significant level at $1,987/oz. has demonstrated support throughout this week. In the event of a breach, additional support is anticipated from the 23.6% Fibonacci retracement level at $1,972/oz.
Should resistance be convincingly surpassed, potential price targets include $2,032/oz. and $2,049/oz. These levels come into play as significant benchmarks if the bullish momentum continues. Investors and traders are advised to closely monitor these key technical levels as they navigate the evolving dynamics of the gold market.
IG Retail Trader data show 58.19% of traders are net-long with the ratio of traders long to short at 1.39 to 1.The number of traders net-long is 5.21% higher than yesterday and 2.55% lower than last week, while the number of traders net-short is 2.88% lower than yesterday and 12.79% higher than last week