Gold Gains Amid Retreat in US Bond Yields and a Weaker Dollar

  • Commodities Analysis

Gold yesterday settled up by 0.31% at 47962 amid a retreat in U.S. bond yields and a weaker dollar. Benchmark 10-year U.S. Treasury yields fell to a two-week low, decreasing the opportunity cost of holding non-yielding bullion. Federal Reserve officials face a ticking clock in their ability to ignore high inflation and are now navigating between their own senses of patience and risk, and a U.S. economy stymied by tangled supply chains, slow hiring, and strong consumer demand. The combination of supply bottlenecks and a surge in household incomes fueled by pandemic-related government aid pushed the personal consumption expenditures price index, a key measure of inflation, to a 30-year high on a year-on-year basis in August.  
 
Investors are now awaiting Thursday's European Central Bank meeting and the U.S. Federal Open Market Committee policy meeting on Nov. 3 for more clues on the tapering timeline. The ECB is expected to keep policy unchanged and leave a decision on its pandemic emergency bond purchase program to December. Elsewhere, the Fed chair Jerome Powell announced last week the Federal Reserve is ready to begin tapering its bond purchases but maintained that it is premature to raise rates as employment remains low.  
 
Technically market is under short covering as the market has witnessed a drop in open interest by -1.58% to settled at 10459 while prices up 149 rupees, now Gold is getting support at 47715 and below same could see a test of 47468 levels, and resistance is now likely to be seen at 48114, a move above could see prices testing 48266.  

Trading Ideas:
# Gold trading range for the day is 47468-48266.
# Gold prices steadied amid a retreat in U.S. bond yields and a weaker dollar.
# Benchmark 10-year U.S. Treasury yields fell to a two-week low
# Fed officials face a ticking clock in their ability to ignore high inflation and are now navigating between their own senses of patience and risk

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