Gold, Bond Yield, US Dollar Technical Analysis: Market Consolidation as Uncertainty Looms

The US dollar remains strong, supported by positive economic data and cautious commentary from the Federal Reserve. The US retail sales report for October indicated a monthly increase of 0.4%, slightly surpassing expectations. However, this growth lagged behind September’s stronger 0.8% increase. Moreover, industrial production showed modest improvement, contracting at -0.3% compared to September’s -0.5% decline. Federal Reserve Chair Jerome Powell highlighted the need for a measured approach to rate cuts, reducing the probability of a December rate cut from 72% to 61.9%. This hawkish stance further supported the dollar, with the US Dollar Index (DXY) trading near the resistance of 107.

On the other hand, US Treasury yields remained steady despite market pressures. The 10-year Treasury yield was virtually unchanged at 4.43% as investors awaited more precise guidance on monetary policy. The economic policy developments created a mixed outlook for bond markets. Additionally, concerns over the potential inflationary effects of new tariffs proposed by Donald Trump added to the uncertainty.

Moreover, gold (XAU) prices dropped sharply due to the strength of the US dollar. The prices slipped below $2,560 and recorded an over 4% weekly drop last week, the largest drop since September 2023. The stronger US dollar weakened demand for gold. The gold market consolidates near the support zone and looks for the next direction.

Gold (XAU) Technical Analysis

Gold Daily Chart – Ascending Channel

The daily gold chart shows that the price has approached a strong support level, defined by the black trendline. The 100-day SMA further reinforces this trendline support around the $2,560 price area. Additionally, the RSI is trading in the oversold region, signaling a potential rebound in the gold market from these levels. However, a break below this support could push prices toward the $2,400 zone, aligned with the 200-day SMA.

Gold 4-Hour Chart – Short-Term Support

The 4-hour chart for gold shows that the price has reached horizontal support and is consolidating. The RSI on the 4-hour chart indicates oversold conditions, suggesting a rebound is due. However, the price has not yet shown any positive momentum and is currently seeking its next direction. The market may consolidate around these levels to stabilize before the next move.

Treasury Yields (TNX) Technical Analysis

10-Year Treasury Note Yield Daily Chart – Resistance

The daily chart for the 10-year Treasury note yield shows it has reached the resistance level of 4.47%. It is now consolidating as it seeks its next direction. A breakout above 4.47% could push the yield higher. The double-bottom formation suggests a bullish pattern. Meanwhile, the RSI consolidates in the overbought region and indicates a potential price correction may occur.

10-Year Treasury Note Yield 4-Hour Chart –Ascending Channel Pattern

The 4-hour chart for the 10-year Treasury yield shows an ascending channel pattern formation. The yield consolidates near the strong resistance level of 4.47%, which could fuel bullish momentum and potentially lead to a breakout.

US Dollar (DXY) Technical Analysis

UD Dollar Daily – Consolidation at Resistance

The daily chart for the US dollar index shows that the index consolidates at the 107 resistance level, representing a solid barrier. A breakout above 107 could likely trigger another significant upside move. The RSI indicates that the index trades in overbought territory, suggesting a correction may develop. However, the US dollar remains strong, with no apparent signs of an imminent correction. A break above 107 could push the index towards 107.50.

US Dollar 4-Hour Chart – Ascending Channel

The 4-hour chart highlights the strength of the US dollar. A strong resistance level is evident within the ascending channel pattern. As seen by the black dotted trendline, a breakout above 107 could push the index toward 107.50.