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3:46 PM · 23 January 2023

BREAKING: Gold plunges amid higher yields

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Today one can observe a clear rebound of bond yields. US bonds are leading the way and are significantly cheaper in the last week of January. On the other hand, the sell-off started on January 19 due to a series of mixed data from the US economy and comments from several US bankers which pointed to the need for further raising interest rates, although at a slower pace (25 bp).

Greenback follows rising US yields and with the start of the US session we observe a strong sell-off of gold. Precious metal launched an upward impulse at the end of November, however we observed several downward corrections in the range of $40-45. Assuming that history will repeat itself again, current declines could reach $1795-1790 an ounce, where local lows from January 19 are located. These levels are crucial to maintain an uptrend (higher highs, higher lows). At the same time, the scale of sell-off on EURUSD is not strong enough to indicate the beginning of a new downward trend in gold.

Moreover, from a speculative perspective, we are seeing an increasing involvement of investors in contracts. An even bigger signal would be generated by a resumption of purchases by ETFs investing in gold, which is not happening so far.

Source: xStation5
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