Gold - A Major Test
Gold prices fell heavily last week as US yields climbed above 1% on the back of the Georgia election results.
With the Democrats having secured an unlikely blue wave, Joe Biden now has the platform to deliver on some of his more ambitious priorities, including a massive stimulus plan.
The President-elect is due to outline plans as early as today, with reports suggesting he will push for a $2 trilllion stimulus package. The worry in the markets then being its impact on inflation, bond purchases and interest rates, hence the moves in yields.
Fed policy makers have been trying to ease these concerns this week and have succeeded to some extent but with the 10-year still above 1%, there's still clearly some work to do.
Should policy makers fail to alleviate these concerns, we could see a very significant breakout to the downside in gold, breaking below the 200/233 SMA band which has been key support since breaking above it back in December 2018. Combined with the rejection of the 61.8 fib last week, it would be a bad warning signal for the yellow metal.
With the Democrats having secured an unlikely blue wave, Joe Biden now has the platform to deliver on some of his more ambitious priorities, including a massive stimulus plan.
The President-elect is due to outline plans as early as today, with reports suggesting he will push for a $2 trilllion stimulus package. The worry in the markets then being its impact on inflation, bond purchases and interest rates, hence the moves in yields.
Fed policy makers have been trying to ease these concerns this week and have succeeded to some extent but with the 10-year still above 1%, there's still clearly some work to do.
Should policy makers fail to alleviate these concerns, we could see a very significant breakout to the downside in gold, breaking below the 200/233 SMA band which has been key support since breaking above it back in December 2018. Combined with the rejection of the 61.8 fib last week, it would be a bad warning signal for the yellow metal.
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