Has gold reached a turning point?

Gold price analysis and news

• Gold holds despite a firmer yield and dollar
• Fed defends new policy

Gold holds despite a firmer yield and dollar

Despite a continued rise in real yields and a slower solid dollar, which is typically bearish for the precious metal, gold prices held up relatively well, achieving a second consecutive weekly gain for the first time since December. As such, the question is, is gold now a turning point?

Fed defends new policy

In the past week, the Fed has launched its first credibility test of its new (AIT) policy, launched in August. The Federal Reserve predicted that inflation would be above its 2% target the interest rate of the project remains at zero until 2023. Although the markets may continue to price earlier than expected by the Fed, Governor Powell’s message was clear, but they will not have an intention to tighten policy until “real” progress has been made. That said, it probably provided a new lease for gold.

On the other hand, the Fed has said it will launch a review of the supplementary leverage ratio so that the release of the capital rule will expire on March 31st.st. The SLR is a capital rule that requires banks to own at least 5% of their total assets. Last April, the Fed released treasury and bank reserves, which enabled them to prepare balance sheets by buying treasury. As such, with the decides to have the capital rule expired, the view is that this could reduce the banking demand for government bonds, as banks will have to hold more capital against treasury holdings, which will result in higher yields to bonds. Although seen in the initial reaction to the announcement, the movements were relatively tame. While there are upside risks to yields, three speeches scheduled for Jerome Powell next week are a sign that the Fed will calm the uncertainty surrounding rising yields.

Aside from the Fed governor’s speeches, there is not a significant amount of released data to look out for next week. In turn, the decline and flow of risk sentiment is likely to dictate gold, although it is important to point out that we will go to the end of the month while only taking on officials next Wednesday, I suspect that next Friday will be some interest. .

Gold levels to look at

In terms of the levels to be looked at, the most important area is at the top 1760-65, previous support and now resistance. I have said before that the technical landscape does not change unless there is a closure above this area, and this is currently the case. On the downside, support in 1720 and 1690 is below. A weekly close above the 20DMA (1737) would be a good sign for bulls and help pave the way for a test of the above resistance zone.

Gold card: daily time frame

Source: Refinitive