Gold dips on rising U.S. yields(With trading strategy)

Gold eased on Monday after U.S. Treasury yields jumped to their highest in nearly 11 months in the previous session.

Spot gold rose 0.21% to $1824.90 per ounce by 11:50(GMT+9) on Monday.

Benchmark U.S. Treasury yields rose to their highest levels since March on Friday, while inflation expectations edged up to a six-year high.

Higher inflation boosts gold but also lifts Treasury yields, which in turn increases the opportunity cost of holding bullion.

Many strategists and economists think that long-term Treasury yields have further to climb. For example, Oxford Economics strategists wrote in a Feb. 12 note that they expect the benchmark 10-year yield to climb another 30 to 40 basis points in the next three months. That would leave it around—or above—1.5%. 

That is because investors expect higher and more persistent inflation than other periods in the past decade. As Federal Reserve Chair Jerome Powell discussed last week, the central bank has decided it will let inflation run above its 2% target to make up for weakness in recessions. 

When it comes to the global economy, higher inflation “may be of limited consequence,” Oxford Economics wrote. But “for markets, the implications are likely to be nontrivial.”

U.S. President Joe Biden pushed for the first major legislative achievement of his term on Friday, turning to a bipartisan group of local officials for help on his $1.9 trillion coronavirus relief plan.

U.S. Treasury Secretary Janet Yellen on Friday urged G7 finance leaders to “go big” with additional fiscal stimulus to recover from the COVID-19 pandemic.

Physical gold demand eased last week in India as volatility in domestic prices put off buyers, while interest for silver remained strong in Singapore and Japan.

Hedge funds and money managers raised their bullish positions in COMEX gold and cut them in silver contracts in the week to Feb. 9, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday.

Trading Strategy (source: Trading Central)

Pivot: 1816.00

Our preference: long positions above 1816.00 with targets at 1831.00 & 1838.00 in extension.

Alternative scenario: below 1816.00 look for further downside with 1810.00 & 1800.00 as targets.

Comment: the RSI is mixed with a bullish bias.

Supports and resistances:

1847.00

1838.00

1831.00

1825.00 Last

1816.00

1810.00

1800.00

Guideline for Trading Central strategy 

Trend chart reading guideline

1. First look at the time period in the upper left corner of the chart: ·30MIN and 1H chart shows the trading suggestions for intraday ·Daily chart shows the market trend analysis in next 2-3 days

2. The blue horizontal line on the chart marks the pivot: pivot indicates the reversal of the market. When the price is above the pivot, it indicates an upward trend, when the price is below the pivot , it indicates a downward trend. When the price breaks through the pivot, the trend is reversed.

3. The red and blue thin curves in the Candlestick chart chart are technical indicators: Red line is MA20+Bollinger bands, Blue line is MA50. under the Candlestick chart chart are also the technical indicators: Blue line is RSI, Red line is 9MA;

4. The green horizontal line is the resistance level for a price increase, and is also the profit target for long orders; the red horizontal line is the support level for a price decrease, and is also the profit target for short orders.

How to use TC strategy？

1.[Pivot] is the reversal line of the market trend. When the price up the pivot line which means in Bullish, you can open a long position or Buy. on the contrary, when the price under pivot line which means in bearish. You ‘d better make short positions or Sell. 

2. [our preference] is the main trading suggestion for your reference. You can exit your trading refer to this target or close positions before it.

3. [Alternative scenario] is the plan B for your reference. 

4. [Comment] is the technical analysis of market trends and technical support for trading strategies. 

5. [Supports and resistance] Supports are levels where the price tend to find support as it falls.

Resistances are levels where the price tend to find resistance as it rises. So, exit before the trend reverse.