Market News & Analysis


Top Story

Gold extends gains as yields and dollar drop

The price of gold was on the rise for the second consecutive day. It found support from three main sources: falling US dollar, bond yields and equity prices. But it remained to be seen whether the metal could break higher with a couple of US equity indices having just hit new record highs just the day before. That said, gold and stocks can rise and have risen in tandem.

So, it may well be yields and the dollar which could determine whether gold can finally break out of its consolidation. Tomorrow’s US jobs report will therefore have a big say in where yields, dollar and in turn gold will be heading. But following this week’s central bank bonanza, bond yields are falling back. Investors are realising that interest rates will remain at historically low levels for a sustained period of time, due to a slowing global economy. Against this backdrop, safe-haven gold prices remain fundamentally supported.

Source: eSignal and City Index.

Meanwhile, the technical picture is beginning to improve again for gold, following the metal’s breakout above its short-term bearish trend. As a reminder, gold’s longer-term technical outlook is also positive after it broke out of a 6-year consolidation pattern in the summer. This is why I keep focusing on shorter-term bullish rather than bearish developments, when they occur. Currently, the metal is holding its own above the short-term bear trend, the 21-day exponential and short-term pivotal zone between $1496 and $1500. For as long as this region gets defended, the bulls will remain happy. However, a closing break back below this zone and the probability of a sharp correction would increase again.


From time to time, GAIN Capital Australia Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.