XAU/USD Subdued After Its Worst Day since November



Gold plunged on Monday on broad based US Dollar strength and rise in US 10YR Yields, largely driven by aggressive expectations around the Fed's prospects for a rate hike.

The US central bank has turned increasingly hawkish over the last few months, due to persistently high inflation, which it stopped calling transitory and in December, it accelerated the QE tapering and upgraded its dot-plot.

Past Performance: Past Performance is not an indicator of future results.

Yesterday's poor showing and renewed demand for the greenback as we head towards the US session, exposes it to 1,784-2, but it may be early for bears to threaten the December low (1,752).

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On the other hand, the precious metal tries to defend a critical area around 1,800, where the 200H4 EMA, the 200Day EMA, the Daily Ichimoku Cloud and the 38.2% Fibonacci of the "December Low/January High" rebound converge.

Past Performance: Past Performance is not an indicator of future results.

If it can avoid daily closes below this area, it may be able to reclaim 1,820, but Dollar weakness will be needed for new month highs (1,832).

Overall, Gold seems to have a mixed outlook, as it has been trading around its 200Days EMA for quite a while and high Inflation can work both ways. It benefits the US Dollar through more hawkish Fed, but it has the ability to help the precious metal as well, if it is used an inflation hedge.

Nikos Tzabouras

Senior Market Specialist

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.


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