XAU/USD: investors chose US bonds over gold 18 February 2021, 09:53

XAU/USD: investors chose US bonds over gold

18 February 2021, 09:53

Scenario
Timeframe	Weekly
Recommendation	SELL STOP
Entry Point	1762.0
Take Profit	1710.0
Stop Loss	1800.0
Key Levels	1710.0, 1762.0, 1818.0, 1900.0

Alternative scenario
Recommendation	BUY STOP
Entry Point	1818.0
Take Profit	1900.0
Stop Loss	1790.0
Key Levels	1710.0, 1762.0, 1818.0, 1900.0

Current trend

Gold quotes correct downward, trading at $1,783 per ounce.

The instrument is moving in the opposite direction to the USD Index, which leapt up after the publication of strong macroeconomic statistics in the US yesterday. However, the key factor that determined the current trend of the metal was the unexpectedly positive placement of US bonds. The yield on 10-year US bonds jumped to 1.311% from 1.164% earlier. One of the most conservative bonds, the 20-year Treasury bond, was placed at 1.920%, well above the 1.657% in January. Even short-term 3-month and 6-month bills were no exception. Their profitability increased to 0.040% and 0.060%, respectively, from 0.035% and 0.050%, respectively.

Support and resistance

Asset quotes are moving within the global downward channel and may reach the support line soon. Technical indicators are in the sell state. Fast EMAs of the Alligator indicator are below the signal one, and the histogram of the AO oscillator is trading in the sell zone.

Resistance levels: 1818.0, 1900.0.

Support levels: 1762.0, 1710.0.

Trading tips

After decline or consolidation below the local minimum at 1762.0, sell positions with the target at 1710.0 are relevant. Stop loss is 1800.0. Implementation period: 7 days or more.

After a reversal and growth or consolidation above the local resistance at 1818.0, buy positions with the target at 1900.0 will be relevant. Stop loss is 1790.0.