CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

🥇Will gold defend support at $1,765❓

11:36 18 February 2021

Gold is one of the few commodities to trade lower year-to-date. Decline has been driven by US yields rising amid fears of a spike in inflation. Did gold lose its historical inflation-hedge feature?

Gold has been treated as a safe haven asset for years, protecting investors' wealth at times of increased risk on the markets. Precious metal has also been seen as an inflation-hedging asset. Inflation means decline in the value of money, weakening of currency and potential struggles of the economy.

Gold maintains its value over the long-term and does not react to major swings in inflation rate. Moreover, unconventional Fed actions following the Global Financial Crisis have increased the importance of bonds and triggered a potential shift in gold status as a financial asset.

We can see on the chart above that following 2009 a significant divergence surfaced between direction of inflation and gold prices. Source: Macrobond, XTB

Please be aware that information and research based on historical data or performance does not guarantee future performance or results. Past performance is not necessarily indicative of future results, and any person acting on this information does so entirely at their own risk.

What has caused the divergence between gold and inflation? A massive amount of money Fed has pumped into the markets via QE markets has made its way not only to the stock markets but also to the commodity markets - thanks to ETFs among others.

Correlation between gold and US yields has increased significantly over the past dozen or so years. Yields reflect expectations of interest rates. Inflation expectations show that yields may soon return towards the 2% area. In theory, such an increase in yields could trigger a downward correction as big as 10% on the gold market.

Continued increase in US yields triggered by fears of returning inflation could deepend correction on the gold market. Source: Macrobond, XTB

Please be aware that information and research based on historical data or performance does not guarantee future performance or results. Past performance is not necessarily indicative of future results, and any person acting on this information does so entirely at their own risk.​​​​​​​

Technical situation

Key support for gold can be found in the $1,665 area, where 50% retracement of the March-August 2020 upward move can be found. Continued decline on the TNOTE market could lead to a break below the aforementioned support. Next support levels in line can be found at $1,690 (61.8% retracement) and $1,605 (around 10% below current price). On the other hand, key resistance levels to watch can be found at $1,800 and $1,840 (38.2% retracement). However, gold price rising to such levels would require a significant drop in US yields over the short-term. Source: xStation5

Please be aware that information and research based on historical data or performance does not guarantee future performance or results. Past performance is not necessarily indicative of future results, and any person acting on this information does so entirely at their own risk.​​​​​​​

This content has been created by X-Trade Brokers Dom Maklerski S.A. This service is provided by X-Trade Brokers Dom Maklerski S.A. (X-Trade Brokers Brokerage House joint-stock company), with its registered office in Warsaw, at Ogrodowa 58, 00-876 Warsaw, Poland, entered in the register of entrepreneurs of the National Court Register (Krajowy Rejestr Sądowy) conducted by District Court for the Capital City of Warsaw, XII Commercial Division of the National Court Register under KRS number 0000217580, REGON number 015803782 and Tax Identification Number (NIP) 527-24-43-955, with the fully paid up share capital in the amount of PLN 5.869.181,75. X-Trade Brokers Dom Maklerski S.A. conducts brokerage activities on the basis of the license granted by Polish Securities and Exchange Commission on 8th November 2005 No. DDM-M-4021-57-1/2005 and is supervised by Polish Supervision Authority.

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