XAU/USD Subdued After Its Worst Day since November
XAU/USD – H4
Gold plunged on Monday on broad based US Dollar strength and rise in US 10YR Yields, largely driven by aggressive expectations around the Fed's prospects for a rate hike.
The US central bank has turned increasingly hawkish over the last few months, due to persistently high inflation, which it stopped calling transitory and in December, it accelerated the QE tapering and upgraded its dot-plot.
Past Performance: Past Performance is not an indicator of future results.
Yesterday's poor showing and renewed demand for the greenback as we head towards the US session, exposes it to 1,784-2, but it may be early for bears to threaten the December low (1,752).
On the other hand, the precious metal tries to defend a critical area around 1,800, where the 200H4 EMA, the 200Day EMA, the Daily Ichimoku Cloud and the 38.2% Fibonacci of the "December Low/January High" rebound converge.
Past Performance: Past Performance is not an indicator of future results.
If it can avoid daily closes below this area, it may be able to reclaim 1,820, but Dollar weakness will be needed for new month highs (1,832).
Overall, Gold seems to have a mixed outlook, as it has been trading around its 200Days EMA for quite a while and high Inflation can work both ways. It benefits the US Dollar through more hawkish Fed, but it has the ability to help the precious metal as well, if it is used an inflation hedge.
Nikos Tzabouras
Senior Financial Editorial Writer
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.
With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.
Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed here.