Sellers defend $1,800, all eyes on US T-bond yields
Gold started the week in a calm fashion and spent the first two trading days fluctuating in a tight range above $1,750. With the US Treasury bond yields falling sharply, however, gold gathered bullish momentum and gained nearly 2% on Wednesday before extending its rally to a fresh monthly high above $1,800 on Thursday. Ahead of the weekend, gold reversed its direction, once again, on rising US T-bond yields and erased the majority of its weekly gains to settle around $1,770.
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$1,800 proves to be a tough resistance to crack for gold.
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US Treasury bond yields continue to drive XAU/USD's action.
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Chinese growth data and Markit Manufacturing PMIs stand out in next week's calendar.
What Happened Last Week
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The market action was subdued on Monday as the US bond markets were closed due to the Columbus Day holiday.
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On Tuesday, the benchmark 10-year US T-bond yield lost more than 3% and helped gold inch higher. On the other hand, the poor performance of US stocks allowed the greenback to outperform its rivals and limited gold upside.
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On Wednesday, US T-bond yields continued to push lower and the dollar came under heavy bearish pressure during the American trading hours. Additionally, upbeat third-quarter earnings from big US financial institutions made it difficult for the safe-haven greenback to find demand. Moreover, gold attracted additional technical buyers after piercing through the upper limit of its near-term trading channel at $1,770.
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The data from the US showed on Thursday that the annual Producer Price Index (PPI) rose to 8.6% in September from 8.3% in August. Furthermore, the US Department of Labor announced that there were 293,000 initial claims for unemployment benefits in the US during the week ending October 9. On Thursday and gold reached $1,800 for the first time since mid-September.
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On Friday, the decisive rebound witnessed in the 10-year US T-bond yield on robust US data forced gold to turn south
News to Follow
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Third-quarter Gross Domestic Product (GDP) data from China will be looked upon for fresh impetus at the beginning of the week. Investors expect the Chinese economy to grow by 5.2% on a yearly basis after expanding by 7.9% in the second quarter.
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On Wednesday, Consumer Price Index (CPI) data from the UK and the euro area will highlight the economic calendar.
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In the meantime, investors will pay attention to the US Treasury bond yields. The benchmark 10-year US T-bond yield has managed to hold above the key 1.5% level despite the weekly decline and gold could come under bearish pressure in case the greenback capitalizes on rising yields.
Short-Term Outlook
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The initial hurdle is located at $1,780 ahead of $1,820.
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Below $1,770 could open the door for additional losses toward $1,760 below $1,750.
