The yellow metal retreats on Wednesday as the UST 10yr yields ripping higher to 1.30%. The spot metal down 1.40% or $17 to $1794. With the yields making higher we focus on $1784 its parallel support and $1764 November 2020 low. There are two probabilities ahead of FOMC minutes due today.
An inverse relationship between Gold and UST 10yr yields:
A BREAKDOWN below $1764 would be a sign that the trend has reversed:
Either the yellow metal can form a double bottom somewhere between $1784-1764 or surrender the near-term trend to bears. A decisive breakdown and close below $1764 would allow the bears to hunt for $1740 and $1720 levels. An interesting fact for bears is the price is trading below 50MA(Weekly) again. This week’s closing the key and a close below $1764 means we are sliding back to $1700 or sub-$1700 levels.
The daily RSI is located at 35, any downfall of the price towards the support zone means RSI would be in the oversold zone. Selling at the lower level is not a wise idea. Here’s the chart.
Death cross: This is a most popular technical pattern for bears suggesting potential for a slide in the near-term. It appears when the 50MA crosses below the 200MA. Here’s the chart
Gold has strong support at $1784-1764; a revisit of $1690 levels looks unlikely at the moment.
It is important to always keep in mind the risks involved in trading with leveraged instruments.
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