Gold eases as firmer U.S. Treasury yields weigh (With Trading Strategy)

Gold prices edged lower on Thursday as higher U.S. Treasury yields dented the metal’s appeal, although losses were limited by a weaker dollar and Federal Reserve Chairman Jerome Powell’s dovish comments.

Spot gold fell 0.3% to $1,798.71 per ounce by 11:50(GMT+8).

Powell, testifying before the House of Representatives Financial Services Committee, continued adding weight to the U.S. central bank’s promise to get the economy back to full employment, and to not worry about inflation unless prices begin rising in a persistent and troubling way.

Benchmark U.S. Treasury yields hovered near a one-year peak hit in the previous session. Higher yields increase the opportunity cost of holding non-yielding bullion.

The dollar languished near three-year lows versus riskier currencies.

Central bankers worldwide have been unequivocal that there are no plans to cut back on money-printing any time soon, or raise interest rates, but markets do not seem to be buying it.

The first big real-world study of the Pfizer/BioNTech vaccine to be independently reviewed shows the shot is highly effective at preventing COVID-19, in a potentially landmark moment for countries desperate to end lockdowns and reopen economies.

Sales of new U.S. single-family homes increased more than expected in January, boosted by historically low mortgage rates and an acute shortage of previously owned houses on the market.

Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.4% to 1,106.36 tonnes on Wednesday from 1,110.44 tonnes on Tuesday.

Photo: World Gold Council

The “reflation trade,” whereby notions that inflationary price pressures will rise and thus support upside price action in raw commodity futures markets, is gaining in popularity recently—or at least in marketplace discussions. 

Longtime market analyst Jeff Wilson of Pro Farmer has pointed out something which has apparently flown under the radar screen of much of the marketplace, but yet is still a significant development. The CME Group has successfully lobbied the Commodity Futures Trading Commission to raise for many markets (and some dramatically) the speculative futures contract trading limits that any one trader can hold, effective March 15. 

For example, in silver futures the limitation on one trader holding spot-month futures contracts was doubled from 1,500 to 3,000. Gold was left unchanged at 6,000 contracts. So what does this mean? It suggests to me that CME Group officials are suspecting much bigger trading volumes are coming in many futures markets later this year as the world comes out of the pandemic and amid a global financial system awash in cash from government central bank stimulus programs. 

This is potentially very good news for raw commodity market bulls and suggests there could be much bigger participation in trading raw commodity futures markets from the long side in the coming months, including gold and silver.

Trading Strategy (source: Trading Central)

Pivot: 1802.25

Our preference: short positions below 1802.25 with targets at 1782.25 & 1773.00 in extension.

Alternative scenario: above 1802.25 look for further upside with 1809.00 & 1815.00 as targets.

Comment: the RSI calls for a slump.

Supports and resistances:

1815.00

1809.00

1802.25

1794.80 Last

1782.25

1773.00

1766.00

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.