XAUUSD – finding few friends with the USD in beast mod
Gold has found few friends of late as both US nominal and real Treasury yields rocket higher, and the USD has been on a one-way bull trend. If funds want to play defence in the portfolio, they increase their USD exposures, given the strong inverse correlation vs. the S&P500 and NAS100. Funds can also get a 5.58% yield holding risk-free US 6-month T-Bills and when gold has no yield this is an opportunity cost. Technically, we see strong support at the channel base, and the Feb/March lows, and combined with the RSI at an extreme 19, there is some scope to bounce, or at least consolidate here. However, that will again require buyers in US Treasuries, which could compel traders to take profits on USD longs. Catalysts this week for traders to navigate and could affect price action in XAUUSD - ADP payrolls, ISM services and nonfarm payrolls.
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