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Gold Yields Continue to Decline

2/22/2023 12:13 PM

The XAU/USD pair continues its downward correction, falling below the key multi-year level of 1850.00 during yesterday's trading. The key factor that determines the current dynamics of gold is the American dollar, and the fact that it does not fall even when taking into account weak macroeconomic statistics is putting pressure on the metal.

The negative factor for the instrument is also the expectations regarding the March meeting of the US Federal Reserve. At the beginning of the month, there was an opinion among experts that the regulator could start a cycle of stabilizing the interest rate at current levels, but after the recent report on inflation in the US, which amounted to 6.4%, slightly decreasing from 6.5%, it has changed. According to analysts, there is now a 24% chance that the Fed will raise the figure by 50 basis points, and the possibility of a 25 basis point increase is estimated at 76%.

Against the backdrop of changing expectations, bond rates began to rise sharply, which are the main alternative to gold. The fact that the yield on 2-year US Treasuries exceeded 4.6% for the first time since 2007 creates additional pressure on the asset's quotes.

On the daily chart, the price is correcting, keeping below the support line of the ascending corridor with dynamic boundaries 1950.0–1910.0.

Technical indicators hold a buy signal, which has weakened significantly in recent days: fast EMAs on the Alligator indicator are approaching the signal line, narrowing the range of fluctuations, and the AO histogram is forming new downward bars, while being in the sell zone.

Support levels: 1800.0, 1740.0. | Resistance levels: 1860.0, 1920.0.

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