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Analysis

Gold (update) – Medium-term uptrend intact supported by declining forward US real yield

gold

Gold (update) – Medium-term uptrend intact supported by declining forward US real yield

Short to medium-term technical analysis

(click to enlarge chart)

(click to enlarge chart)

(click to enlarge chart)

Time stamped: 25 Feb 2022 at 12:20pm SGT 

Source: CMC Markets & TradingView

  • In our latest “Chart of Week” published on 20 February (click here for a recap), Gold (cash) has rallied as expected and hit the resistance/target zone of 1,943/1,948 (printed a high of 1,975 on 24 February) in light of the rising geopolitical risk from Russia-Ukraine crisis.
  • The longer-term secular view (multi-months to multi-years) of Gold (cash) remains bullish if the 1,670/1,640 key long-term pivotal support holds. Elliot Wave/fractal analysis suggests a potential terminal level of 2,300/2,335 (see weekly chart).
  • From a medium-term horizon (1 to 3 weeks), yesterday’s pull-back of -5% during the US session from its 1,975 intraday high has managed to stall at the 50-period moving average, the swing area of 18 February 2021 and 50% Fibonacci retracement of the recent up move from 28 January 2022 low to 24 February 2022 high.
  • From an intermarket analysis perspective, the price actions of Gold (spot) have moved inversely with the movement of the expected forward US 10-year Treasury real yield since early November 2018 where we consider the future expectations of the US 10-year inflation via the 10-year breakeven inflation rate.
  • Since mid-February 2022, the expected forward US 10-year Treasury real yield has stared to inch downwards which can be a significant factor to support further potential up move in the price of Gold (spot).  
  • Hence, its medium-term uptrend phase remains intact and if 1,850 key medium-term pivotal support holds, Gold (cash) may see another potential impulsive up move sequence to retest 1,1975 before targeting the next resistance zone at 2,000/2,016 (see 4-hour chart).
  • On the other hand, a 4-hour close below 1,850 negates the bullish tone for a deeper corrective pull-back towards the next support at 1,785 (the range bottom of 21 December 2021 to 28 January 2022.

 


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