Gold Price Outlook – Struggling to Maintain Support as Bond Yields

Gold Price (XAU/USD), Chart, & Analysis

• Two-year US Treasury yields have been rising steadily.
• Gold eyes support below $1,700/oz.

Tuesday’s US inflation report showed that price pressure in the US is not easing and further rate hikes are needed. Inflation increased on a month-to-month basis in yesterday’s report, surprising market participants as price lowered and positioned for a move lower. Financial markets are now showing a 35% chance that the September 21 meeting will increase by 100 basis points. These increased expectations can be seen in the interest rate sensitive two-year US Treasury which is now trading with a 15-year high yield of 3.78%. Long-term treasury yields will weigh heavily on gold in the coming months.

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The Fed will also be watching the spread of the US Treasury 2-10-year yield, a closely followed bearish indicator. The spread, negative 33 basis points, is 10 basis points away from the multi-year low it set on August 8 this year.

The weekly gold chart only shows support below $1,700/oz. Holding vendors at bay for now. A bunch of the former went all the way down to $1,667/oz. Potentially stopping any selloff, although this would leave a gap of 50% Fibonacci retracement level at $1,618/oz vulnerable. Recent weekly high at $1,736/oz. and $1,746/oz. Prices should be controlled in the near future.

Weekly Gold Price Chart – September 14, 2022

Data from retail traders shows that 87.77% of traders are net-long with a ratio of long to short traders with a ratio of 7.18 to 1. Net-long traders are 6.78% lower than yesterday and 7.72% higher than last week, while traders net-short traders are 3.89% lower than yesterday and 22.82% lower than last week.

We generally take the opposite view of crowd sentiment, and the fact that traders are net-long suggests that gold prices may continue to decline. Positioning is less net-long than yesterday but higher net-long than last week. The combination of current sentiment and recent changes gives us a Further mixed gold trading bias.

What is your Opinion Sleep – bullish or bearish?? You can let us know via the form provided at the end of this article or you can contact the author via Twitter @nickcawley1,