gold and US dollar futures market image

Gold Prices saddled by Higher Real Yields, Strong US dollar, Downside Breakout Eyed

By:Diego Colman

Russia's invasion of Ukraine triggered a major rally in gold prices during the first quarter, pushing the metal close to its all-time high near $2,075 per ounce. However, the geopolitical premium seems to have unwound, even though the war in Eastern Europe is not over and continues to drag on almost three months after its outbreak.

Examining the daily chart, we can see that XAU/USD has fully retraced its geopolitical turmoil-induced gains, dropping 11% from its March high to trade slightly above $1,835, an area of confluence support, where the 200-day simple moving average converges with the lower boundary of a medium-term ascending channel.

The recent pullback in the commodity has been prompted by, among other things, the solid U.S. dollar momentum, and more importantly, the rising interest rate environment. For context, the DXY index, a gauge of the greenback strength, has surged more than 6% since April, while the 10-year real yield (TIPS) has turned positive for the first time in more than two years, climbing from -0.53% to 0.20%, the highest level since November 2019.


Source: CNBC

Although gold is considered a safe-haven asset, it has not lived up to that reputation of late. In fact, in recent weeks, gold has bizarrely tracked losses in the equity space, rather than bucking the trend of risk assets, a sign that real rate dynamics are far more important to the precious metal than investor sentiment. With real yields expected to continue their ascent on hawkish Fed policy, XAU/USD could face further headwinds in the near term, especially if the recession narrative begins to subside and traders ditch defensive positions.

In terms of technical analysis, XAU/USD is dancing around a major support near $1,835/$1,830, as mentioned earlier. If the bears manage to drive price below this floor decisively, selling interest could gain momentum, setting the stage for a retest of the 2022 low at $1,780. On further weakness, the attention shifts lower to the December 2021 swing low at $1,753.

On the flip side, if buyers regain the upper hand and spark an upswing in price action, initial resistance spans from $1,870 to $1,875. If this barrier is cleared, we can’t rule out a move towards $1,910, followed by $1,960, though the bullish argument is somewhat weak at this point.




Gold Price Chart Prepared Using TradingView

Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

Related Posts

tastylive content is created, produced, and provided solely by tastylive, Inc. (“tastylive”) and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, digital asset, other product, transaction, or investment strategy is suitable for any person. Trading securities, futures products, and digital assets involve risk and may result in a loss greater than the original amount invested. tastylive, through its content, financial programming or otherwise, does not provide investment or financial advice or make investment recommendations. Investment information provided may not be appropriate for all investors and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. tastylive is not in the business of transacting securities trades, nor does it direct client commodity accounts or give commodity trading advice tailored to any particular client’s situation or investment objectives. Supporting documentation for any claims (including claims made on behalf of options programs), comparisons, statistics, or other technical data, if applicable, will be supplied upon request. tastylive is not a licensed financial adviser, registered investment adviser, or a registered broker-dealer.  Options, futures, and futures options are not suitable for all investors.  Prior to trading securities, options, futures, or futures options, please read the applicable risk disclosures, including, but not limited to, the Characteristics and Risks of Standardized Options Disclosure and the Futures and Exchange-Traded Options Risk Disclosure found on

tastytrade, Inc. ("tastytrade”) is a registered broker-dealer and member of FINRA, NFA, and SIPC. tastytrade was previously known as tastyworks, Inc. (“tastyworks”). tastytrade offers self-directed brokerage accounts to its customers. tastytrade does not give financial or trading advice, nor does it make investment recommendations. You alone are responsible for making your investment and trading decisions and for evaluating the merits and risks associated with the use of tastytrade’s systems, services or products. tastytrade is a wholly-owned subsidiary of tastylive, Inc.

tastytrade has entered into a Marketing Agreement with tastylive (“Marketing Agent”) whereby tastytrade pays compensation to Marketing Agent to recommend tastytrade’s brokerage services. The existence of this Marketing Agreement should not be deemed as an endorsement or recommendation of Marketing Agent by tastytrade. tastytrade and Marketing Agent are separate entities with their own products and services. tastylive is the parent company of tastytrade.

tastycrypto is provided solely by tasty Software Solutions, LLC. tasty Software Solutions, LLC is a separate but affiliate company of tastylive, Inc. Neither tastylive nor any of its affiliates are responsible for the products or services provided by tasty Software Solutions, LLC. Cryptocurrency trading is not suitable for all investors due to the number of risks involved. The value of any cryptocurrency, including digital assets pegged to fiat currency, commodities, or any other asset, may go to zero.

© copyright 2013 - 2024 tastylive, Inc. All Rights Reserved.  Applicable portions of the Terms of Use on apply.  Reproduction, adaptation, distribution, public display, exhibition for profit, or storage in any electronic storage media in whole or in part is prohibited under penalty of law, provided that you may download tastylive’s podcasts as necessary to view for personal use. tastylive was previously known as tastytrade, Inc. tastylive is a trademark/servicemark owned by tastylive, Inc.