FX.co ★ GOLD Price Analysis for 17 February, 2021

GOLD (XAU/USD) ANALYSIS, PRICE AND CHART

• US dollar underpinned by higher US Treasury yields.
• Gold continued losing ground for the fifth consecutive session on Wednesday.
• Gold falling into multi-month lows.

The recent surge in US Treasury yields to multi-month highs is underpinning the value of the US dollar and weighing heavily on the gold price. The yield on the UST 10-year is now around 1.30%, up from a low print of just over 0.53% in late-July last year.

The bond market is continuing to price in a strong economic recovery and inflation, putting pressure on the rates market. A range of risk-on markets remain supported in the short- to medium-term as investors wait for the US stimulus package to be agreed and announced.

Gold continued losing ground for the fifth consecutive session on Wednesday. The USD recovered further from multi-week lows and weighed on the metal. The stage seems set for a retest of November 2020 lows, near the $1764 area.

The daily gold chart is looking increasingly negative with the November 30 low is the next target. This also coincides with the 50%Fibonacci retracement level from the March-August 2020 rally. Below here there is a cluster of old highs and lows all the way down to the early-June swing low at $1,670.7.

On the flip side , any meaningful recovery attempt beyond the $1800 mark might now be seen as a selling opportunity and runs the risk of fizzling out rather quickly near the $1808-10 region. That said, some follow-through buying might trigger a short-covering move and push the commodity further towards the overnight swing highs, around the $1825-27 supply zone.