Gold Price Analysis: XAU/USD bounces off nine-month low below $1,700 but remains vulnerable

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  • Gold bears catch a breather near the lowest since June 2020.
  • Treasury yields stay strong near one-year top as Fed’s Powell joined the league of ECB but couldn’t placate bond bears.
  • Vaccine war gains news entry of Australia after Italy blocks AstraZeneca jabs.
  • All eyes on US NFP, stimulus updates amid a light calendar in Asia.

Gold consolidates recent losses near multi-day low, marked before a few hours, while taking rounds to $1,700 amid the initial Asian session on Friday. Even so, the yellow metal remains vulnerable to further downside as US Treasury yields tease one-year high, flashed after Fed Chair Jerome Powell’s speech.

Treasury yields keep Powell-packed performance…

Although Fed’s Powell shrugged off imminent challenges to the US central bank from US Treasury yields’ rally, bond bears aren’t convinced. The Fed boss warrants “disorderly market conditions” to react to the bond moves until then sustained inflation above 2.0% and maximum employment can only change the monetary policy.

While US Federal Reserve Chair’s comments joined the latest signals from the ECB, which try to placate bond bears, progress in the US stimulus and the UK’s budget raise considerable upside risks to the reflation fears. As per the latest updates, US Senate is inching closer to passing President Joe Biden’s $1.9 trillion covid relief bill.

Read: US Senate a step closer toward passing $1.9 trillion Covid relief bill

Elsewhere, Italy blocks Australia’s 250K AstraZeneca vaccine jabs while terming the OZ nation “non-vulnerable” as per the latest EU governing rules.

Against this backdrop, the Wall Street benchmarks dropped below 1.0% each whereas US 10-year Treasury yields rise to 1.569%, the fresh high since February 2020.

Looking forward, global markets are likely to witness the pre-NFP trading lull unless American policymakers offer any major progress on the covid stimulus voting in the Senate. Also important is the coronavirus (COVID-19) updates and vaccine news that has flashed fresh risks off-late.

Read: Nonfarm Payrolls Preview: Dollar booster? Three expectation downers pave way for upside surprise

Technical analysis

Unless rising past-November 2020 low near $1,765, gold prices stay directed toward a falling trend line from August, currently around $1,680.

 

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