Gold, Bond Yield, US Dollar Technical Analysis Ahead of US Inflation Figures

Gold (XAU) prices dropped on Friday as the US dollar recovered despite declining Treasury yields (TNX). Following Donald Trump’s election victory, traders reduced their exposure to the “Trump trade” due to uncertainties surrounding his tariff policies. Gold continues downward after rebounding from around $2640 on Thursday. With political risk in the US easing, market participants are now watching Trump’s policies closely for further insights. As demand for safe-haven assets weakened, investors rebalanced their portfolios, shifting focus from bullion to stocks.

On the other hand, the US dollar (DXY) strengthened after the Federal Reserve’s rate cut. This signals that the central bank remains cautiously optimistic about economic growth. However, Treasury yields saw little movement as the Fed acknowledged a cooling labour market and persistently elevated inflation. Despite the 25-basis-point cut, Fed Chair Jerome Powell provided minimal forward guidance, keeping future policy options open due to the strong economy. The recent UoM Consumer Sentiment report for November exceeded expectations, rising to 73.0. This increase suggests growing consumer confidence.

The markets are waiting for the Consumer Price Index and Producer Price Index data on Wednesday and Thursday to provide the inflation figures. Moreover, the retail sales data on Friday will also be important in providing additional statistics that may move gold, the US dollar, and Treasury yields. As the market digests Trump’s victory, it may set the stage for these instruments’ next move.

Gold (XAU) Technical Analysis

Gold Daily Chart – Consolidation above 50 SMA

The daily chart for gold shows a price correction from the resistance at the red-dotted trend line. The price began its correction from this resistance and found support at the 50 SMA. Thursday’s rebound from the 50 SMA reversed lower on Friday, but the price remained above $2,672.

The RSI on the daily chart closed below the midline, indicating that further price corrections are possible this week. The strong support for this correction is at $2,595, which aligns with the support of the ascending broadening wedge pattern.

Gold 4-Hour Chart – Ascending Channel Pattern

The 4-hour chart for gold shows the formation of an ascending channel, with the price rebounding from the channel’s support. If the price finds resistance at $2720, gold may continue its downward momentum. The RSI is also consolidating below the midline, highlighting price weakness.

Treasury Yields (TNX) Technical Analysis

10-Year Treasury Note Yield Daily Chart – Channel Resistance

The daily chart for the 10-year Treasury Note yield shows the formation of an ascending channel, with resistance at 4.47%. After hitting this resistance, the note yield continued to decline. Strong support lies at the 200 SMA at 4.19%. The RSI suggests a drop before the next move is higher. A break above 4.47% would indicate further upside potential.

10-Year Treasury Note Yield Hourly Chart –Ascending Channel Pattern

The 4-hour chart for Treasury yield shows the formation of an ascending channel, with the price hitting resistance at 4.47%. The RSI continues to drop toward the midline, indicating that the Treasury yield may consolidate around these levels before the next move.

US Dollar (DXY) Technical Analysis

UD Dollar Daily – Fluctuations

The US dollar consolidates within a wide range after the strong surge following Donald Trump’s victory. The market is now digesting Trump’s policies, which may lead to price fluctuations for a few days. The next direction will become clear once the market fully absorbs the news and policies. The strong resistance for the US dollar index is at 105.60, while strong support lies at the 200 SMA at 103.90. A break of either level will determine the next direction for the US dollar.

US Dollar 4-Hour Chart – Symmetrical Broadening Wedge

The 4-hour chart for the US dollar shows the formation of a symmetrical broadening wedge pattern, reflecting volatility due to the US election. The upper resistance of this wedge aligns with the daily chart resistance at 105.60, while the downside support is at 103.20. The RSI is currently above the midline, indicating the possibility of positive momentum. The index is presently consolidating within a wide range with no clear direction.