Signal price

XAU/USD Maintains Gold Ratio at 61.8%

  • Gold is fragile at an average reversion level of 50% and suggests a decline in the gold count of 61.8%.
  • Attention will turn to the ECB and US inflation data later this week.

In Asia, the price is trying to break below the mid 50% reversion level which again exposes the 61.8% Fibo at $1,850.

At $1,852, the price of gold continues to decline after crossing into the mid-50% reversion zone of the hourly bullish impulse identified in previous trades, as illustrated in the technical analysis below. The US Dollar led the way mid-week and remains firm in Asia, trending higher across the currency basket as measured by the DXY Index.

The U.S. dollar index gained on Wednesday, reversing earlier declines as investors retreated from equities at the same time as the U.S. 10-year auction hit a high yield of 3.03%, down from 2.943% at the previous auction. Additionally, the greenback hit a new two-decade high against the yen, with the Bank of Japan remaining one of the few global central banks to maintain a dovish stance. We have seen a subsequent rally in US yields and 10-year bonds are now holding above 3%, supporting the greenback.

Gold had also been supported for its safe-haven qualities following warnings from the OECD that the world would pay a heavy price for the war in Ukraine. ”He cut his outlook for global growth this year to 3% from 4.5% in December. This follows revised growth forecasts from the World Bank earlier this week. Gold gave up some gains in late trading as the dollar strengthened,” analysts at ANZ Bank noted.

Meanwhile, analysts at TD Securities explained: “While the war in Ukraine has helped to bend the bears, the disappearance of geopolitical risk premia on global assets has not seen this cohort of discretionary traders liquidate. their length.

”In turn, the gap between gold rates and real rates can be attributed to both an undue rise in real rates given quantitative easing, and the still massive amount of complacent length held in l gold, keeping yellow metal prices high. ‘

For the day ahead, attention will turn to the European Central Bank before traders brace for US inflation data on Friday.

TD Securities analysts say unless Governor Christine Lagarde ‘commits to a 50 series, EUR/USD has limited room for gain, especially with the Euribor curve trading and the US CPI due the next day. More favorable risk/reward for EURUSD to trade lower. Long-term inflation forecasts will be essential.”

TDS analysts also argued that the ECB ‘will announce that the APP will end in a few weeks, and send a strong signal that rate hikes are coming in July and September (October remains a more interesting meeting in that sense) . The forecast will show higher inflation and weaker growth, highlighting the ECB’s challenge going forward.

Therefore, gold could be attractive for its safe-haven qualities. The weakening economic backdrop allowed the precious metal to find some support among investors. Gold recently broke above $1,850, despite a stronger dollar.

Gold technical analysis

In the New York trade, it was indicated and illustrated on the chart below that the price was entering a 50% retracement as follows:

In Asia, the price is trying to break below the mid 50% reversion level which again exposes the 61.8% Fibo at $1,850.