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XAU/USD turns sideways below $1,630 as DXY losses momentum, yields reach 4.24%

October 21, 2022| Forex Market

  • Gold prices are oscillating, following the footprints of the DXY.
  • S&P500 futures have attempted a rebound, however, the risk impulse is still negative.
  • The 10-year US yields have kissed 4.24% for the first time since the sub-prime crisis.

Gold price (XAU/USD) is displaying back-and-forth moves in a narrow range of $1,625.00-1,628.55 in the Tokyo session. The precious metal is awaiting price action from the US dollar index (DXY). The DXY is struggling to sustain above the immediate hurdle of 113.00. The asset attempted to sustain above the 113.00 hurdle but failed to sustain as S&P500 futures have retreated from near 3,645.00.

Well, returns from the US government bonds are not sensing any barricade and are flying like there is no tomorrow. The 10-year US Treasury yields have accelerated to 4.24% for the first time since the sub-prime crisis. The yields are being strengthened by hawkish commentaries from Federal Reserve (Fed) policymakers.

On Thursday, Fed Governor Lisa Cook crossed wires citing that inflationary pressures are unacceptably higher and more rate hikes are needed to curtail them. She further added that more rate hikes will line up and later the restrictive policy will be kept.

As per the CME FedWatch tool, chances for a fourth consecutive 75 basis point (bps) rate hike remain more than 93%.

Gold technical analysis

On an hourly scale, the gold price has witnessed a steep fall after testing the highest auction area placed in a $1,642.58-1,671.83 range. The precious metal is declining toward the two-year low at $1,614.85, 8 September 2022. Declining 20 and 50-period Exponential Moving Averages (EMAs) at $1,629.86 and $1,634.46 add to the downside filters.

Meanwhile, the Relative Strength Index (RSI) (14) is oscillating in a 40.00-60.00 range and a shift into the bearish range of 20.00-40.00will trigger the downside momentum

Gold hourly chart




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