Alert

Has the stock market crashed? Tune into this week's Truth or Skepticism to hear what Tom and Dylan have to say.
tastytrade logo
Price of Gold sign

Gold Prices React to the Fed, Yields & Non-Farm Payrolls (NFP)

Nov 4, 2021

GOLD (XAU/USD) TALKING POINTS:

  • Gold prices edge higher as the probability of a 2021 rate hike dissipates
  • Taper tantrum-free Fed meeting places the employment report (NFP) at the forefront of risk-sentiment
  • XAU/USD currently remains within the confines of key Fibonacci levels

In response to the Fed rate decision and the press conference that followed, Gold prices recovered a portion of this week’s losses as investors priced in a 2022 rate hike.

Although inflation currently remains above the target of 2%, the Federal reserve has continued to reiterate their commitment to the labor market, placing the Non-farm payroll (NFP) report at the forefront of risk sentiment.

1104_dfx1.png

DailyFX Economic Calendar

For Gold, Silver and other safe-haven assets that have a negative correlation (move in opposite directions) to the US Dollar, slightly less hawkish commentary from Fed Chair Jerome Powell saw Gold and Silver edge higher as expectations of a 2021 rate hike dwindled.

However, higher yields may continue to support the US Dollar which will may hinder gold's ability to climb higher.

GOLD TECHNICAL LEVELS

After rebounding off of the 61.8% Fibonacci retracement level of the 2020 move which continues to hold as long-term support at $1,680, Gold bulls temporarily managed to drive prices back above $1,900 before falling back towards the upper bound of the descending channel that has been forming since prices peaked in August last year.

With the formation of a doji candle now appearing on the weekly chart at the 38.2% retracement level of the 2021 move, the NFP report is expected to be the major risk event for the imminent move.


Gold (XAU/USD) Weekly Chart

1104_dfx2.png


Chart prepared by Tammy Da Costa using TradingView

Meanwhile on the daily chart below, Gold prices are currently testing trendline resistance which coincides with the 50-day moving average (MA).

At the time of writing, additional resistance currently remains at the key psychological of $1,785 with support holding firm at the 50% retracement of the 2020 move at around $1,762.


Gold (XAU/USD) Daily Chart

1104_dfx3.png


Chart prepared by Tammy Da Costa using TradingView


GOLD SENTIMENT

1104_dfx4.png

Gold: Retail trader data shows 75.73% of traders are net-long with the ratio of traders long to short at 3.12 to 1. The number of traders net-long is 3.05% higher than yesterday and 5.11% higher from last week, while the number of traders net-short is 11.97% lower than yesterday and 4.77% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Gold prices may continue to fall.

Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger Gold-bearish contrarian trading bias.

Written by Tammy Da Costa, Analyst for DailyFX.com
Contact and follow Tammy on Twitter: @Tams707


Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

Related Posts

tastytrade content is provided solely by tastytrade, Inc. (“tastytrade”) and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, transaction or investment strategy is suitable for any person. Trading securities can involve high risk and the loss of any funds invested. tastytrade, through its content, financial programming or otherwise, does not provide investment or financial advice or make investment recommendations. Investment information provided may not be appropriate for all investors, and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. tastytrade is not in the business of transacting securities trades, nor does it direct client commodity accounts or give commodity trading advice tailored to any particular client’s situation or investment objectives. Supporting documentation for any claims (including claims made on behalf of options programs), comparison, statistics, or other technical data, if applicable, will be supplied upon request. tastytrade is not a licensed financial advisor, registered investment advisor, or a registered broker-dealer. Options, futures and futures options are not suitable for all investors. Prior to trading securities products, please read the Characteristics and Risks of Standardized Options and the Risk Disclosure for Futures and Options found on tastyworks.com. 

tastytrade is a trademark/servicemark owned by tastytrade.

tastyworks, Inc. ("tastyworks") is a registered broker-dealer and member of FINRA, NFA and SIPC. tastyworks offers self-directed brokerage accounts to its customers. tastyworks does not give financial or trading advice nor does it make investment recommendations. You alone are responsible for making your investment and trading decisions and for evaluating the merits and risks associated with the use of tastyworks’ systems, services or products. tastyworks is a wholly owned subsidiary of tastytrade, Inc (“tastytrade”).

tastyworks, Inc. (“tastyworks”) has entered into a Marketing Agreement with tastytrade (“Marketing Agent”) whereby tastyworks pays compensation to Marketing Agent to recommend tastyworks’ brokerage services. The existence of this Marketing Agreement should not be deemed as an endorsement or recommendation of Marketing Agent by tastyworks. tastytrade is the parent company of tastyworks. tastyworks and Marketing Agent are separate entities with their own products and services. tastytrade has different privacy policies than tastyworks.

Quiet Foundation, Inc. (“Quiet Foundation”) is a wholly-owned subsidiary of tastytrade The information on quietfoundation.com is intended for U.S. residents only. All investing involves the risk of loss. Past performance is not a guarantee of future results. Quiet Foundation does not make suitability determinations, nor does it make investment recommendations. You alone are responsible for making your investment and trading decisions and for evaluating the merits and risks associated with the use of Quiet Foundation’s systems, services or products.

Small Exchange, Inc. is a Designated Contract Market registered with the U.S. Commodity Futures Trading Commission. The information on this site should be considered general information and not in any case as a recommendation or advice concerning investment decisions. The reader itself is responsible for the risks associated with an investment decision based on the information stated in this material in light of his or her specific circumstances. The information on this website is for informational purposes only, and does not contend to address the financial objectives, situation, or specific needs of any individual investor. Trading in derivatives and other financial instruments involves risk, please read the Risk Disclosure Statement for Futures and Options. tastytrade is an investor in Small Exchange, Inc.

© copyright 2013 – 2022 tastytrade. All Rights Reserved. Applicable portions of the Terms of use on tastytrade.com apply. Reproduction, adaptation, distribution, public display, exhibition for profit, or storage in any electronic storage media in whole or in part is prohibited under penalty of law, provided that you may download tastytrade’s podcasts as necessary to view for personal use.