Gold Price Ignores Rising Treasury Yields and a US Dollar Rally. Higher XAU/USD?

GOLD, XAU/USD, US Dollar, Treasury Yields, Crude Oil, – Talking Points

• Gold hit the high notes again today as it scopes new highs
• Markets are reassessing the outlook with equity markets reeling
• If the risk-off sentiment prevails, will XAU/USD break above 2000?

The spot gold price has rallied going into Thursday’s trading session, seemingly defying gravity with the US Dollar stronger elsewhere and Treasury yields galloping back after a recent dip.

Sentiment across markets has soured but conditions are choppy with perceived haven assets of gold and the US Dollar rallying while Treasury bonds sail south along with the Japanese Yen.

USD/JPY has crossed the Rubicon so to speak, trading above 150 and inching toward 150.50 for the first time since the Bank of Japan intervened in the FX market in October last year. The lower Yen has seen the Nikkei 225 index trade more than 2% today.

AUD/USD has tumbled to its lowest level since November last year even though the RBA has signalled a rate rise next Tuesday. The market appears to have misinterpreted RBA Governor Michele Bullock’s comments at the Senate estimates hearing today.

Hong Kong’s Hang Seng Index (HSI) has peeled lower after a rally yesterday on hopes that Chinese Government stimulus measures would kick-start the economy.

Equity markets are under the pump on the prospect that the Federal Reserve might be about to reignite its tightening program after a string of solid economic data points of late.

Meta beat earnings estimates after the bell with revenue of US$ 34.2 billion against estimates of US$ 33.5 billion but warned on the economic outlook.

Crude oil has held the gains going into the North American close as geopolitics continue to plague the energy commodity.

The European Central Bank (ECB) rate decision today will be in focus and despite some hawkish remarks from President Lagarde, the market is expecting the target rate to be left unchanged at 4.50%.

The full economic calendar can be viewed here.

GOLD PRICE OUTLOOK

Recent moves have seen volatility pick up for gold as measured by the GVZ index. This may suggest that further notable moves in the gold price might evolve.

The GVZ index measures volatility in the gold price in a similar way that the VIX index gauges volatility in the S&P 500.

SPOT GOLD, DXY (USD) INDEX, US 10-YEAR TREASURY AND GVZ INDEX

Chart created in TradingView

— Written by Daniel McCarthy, Strategist for DailyFX.com

Please contact Daniel via @DanMcCarthyFX on Twitter