XAU / USD is stable at $ 1,800

• XAU / USD gold stabilized at the $ 1,800 zone.
• The precious metal rose as high as $ 1,820 earlier in the week and as low as $ 1,790 on Wednesday.
• Traders will be reluctant to read too much about recent moves due to weakened liquidity conditions for the New Year.

It’s been a choppy pair of sessions for spot gold prices (XAU / USD), which fell back from previous weekly highs at $ 1,820 to below $ 1,790 at one point on Wednesday, but have since stabilized in the zone. from $ 1,800 on Thursday. Gold has been affected by turmoil in the bond and currency markets in recent days, although traders refrained from reading too much on the recent price action due to weakened liquidity conditions from the holidays that will prevail until the very end. of the week. One thing that can be derived from the recent price action is that the 21-day moving average appears to have become a key support level for XAU / USD gold.

Real yields rose on Wednesday, with the 10-year TIPS trying to push north of the -1.0% level having previously traded around -1.06% and this rise seemed to put pressure on gold at the time. Remember, gold is inversely related to real US returns, as they are a proxy for “opportunity cost” – as real returns increase, so does the opportunity cost of owning gold that does not. yields, so demand for the precious metal weakens.

Since then, the 10-year TIPS yield has fallen back to the -1.06% area, allowing gold to rally back to the $ 1,800 area. There appeared to be nothing behind recent movements in real yields, with the initial rise spurred by a rally in the 10-year nominal yield, breaking above the 1.50% level for the first time in a few weeks and briefly holding. above 1.55% amid technical sales. Remember that higher bond yields reflect the fact that bond prices have fallen. As long as the 10-year TIPS remains subdued south of the $ 1,800 level, XAU / USD gold has a decent chance of staying in the $ 1,800 zone.

A gradual weakening of the US dollar also helped gold rebound from Wednesday’s slide. The DXY fell below 96.00 on Wednesday for the first time since mid-December after the latest US trade figures showed the country’s monthly trade deficit topping $ 97 billion, well above expectations for a monthly deficit figure of $ 89 billion. Since then, the DXY has been choppy, but it continues to trade in the 96.00 area, apparently failing to gain any momentum from the latest report of strong weekly jobless claims (initial claims fell below 200,000).

Technical levels