XAU/USD PRICE EXTENDS RALLY WITH REAL YIELDS UNDER PRESSURE, GOLD OUTLOOK: On Wednesday, gold prices rose another 1% as real yields fell even lower. A weaker US dollar may possibly be helping to push XAU/USD higher. If Treasury yields rise, the precious metal may lose some of its recent gains. Eight out of the last ten trading sessions have seen gold prices rise. Following a 1% rise toward the $1,830-price mark on Wednesday, XAU/USD is presently up 3.2 percent month to date. With real yields back in free-fall mode, gold prices appear to be gaining ground. In reality, the real yield on ten-year US Treasuries just fell to -0.97%, the lowest level since February 12th. Gold prices may be under pressure as well, with US Dollar bears losing yesterday’s inflow of strength following sizzling inflation statistics. Not to mention, Fed Chair Powell advised against intervening hastily to limit current inflation during his congressional hearing earlier today. Maintaining low interest rates while dealing with growing inflation is a favorable situation for gold because it keeps real yields low. GOLD PRICE CHART WITH TEN-YEAR TREASURY REAL YIELD OVERLAIDIn my Q3 top trade suggestion, I explore this as well as the potential for gold and silver price action to recover from June’s ugly -7 percent selloff. In particular, I believe there is a good chance that Fed officials will continue to monitor inflation while extending the taper timeframe. This might coincide with an unwinding of Fed rate rise bets, driving gold prices upward as real rates are dragged lower in reaction. However, the drop in Treasury yields appears to be a little overblown. As a result, a rise in yields could be a headwind for gold. Technically, gold price action is likewise confronted with confluent resistance around the $1,835 level. The 50-day simple moving average, upper Bollinger Band, and 38.2 percent Fibonacci retracement of the August 2020 to March 2021 trading range underline this key barrier. These technical impediments may keep upward momentum in check, but another step lower in real yields might spark a topside breakthrough toward the $1,900 level. Continue reading – Technical Analysis Fundamentals— Rich Dvorak, a DailyFX.com analyst, wrote this article. For real-time market updates, follow @RichDvorakFX on Twitter./n
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