CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please consider our Risk Disclosure Notice and ensure that you fully understand the risks involved. CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please consider our Risk Disclosure Notice and ensure that you fully understand the risks involved.

Gold prices rise as US dollar falls on economic woes, where to for XAU/USD?

Gold prices climbed as the US dollar and treasury yields fell; disappointing US housing data boosted economic woes ahead and outside of BoJ, XAU/USD is eyeing us industrial production.

Gold prices climbed over the past 24 hours, extending gains ever since this week’s Federal Reserve rate decision. On the chart below, the anti-fiat yellow metal can be seen rising as the US dollar and two-year Treasury yields weakened throughout Thursday’s trading session. When the latter two move in the same direction, whether it is up or down, it tends to produce the most conviction for XAU/USD.

The DXY dollar Index tumbled one percent on Thursday, the most since May. A closer look reveals that the markets pared back Federal Reserve rate hike expectations in one year. This can be seen by looking at Federal Funds Futures, with the implied yield of the generic 12th contract falling to 3.73% from 4% earlier in the week. That might explain the drop in the twi-year Treasury yield.

This followed relatively disappointing economic data from the US. Housing starts and permits gained 1.55 and 1.69 million in May versus 1.69m and 1.77m expected respectively. Initial jobless claims also clocked in at 229k against the 217k consensus. Meanwhile, the probability of a recession in the US in 1 year is on the rise. Data from Bloomberg has odds of one at 31.5%, which is up from 20% earlier this week.

Heading into the weekend, the economic docket is looking quieter. Outside of the Bank of Japan today, US industrial production is due at 13:15 GMT. A weakening to 0.4% m/m is seen from 1.1% prior. A much softer print could continue compounding rising economic woes. Gold could gain if markets accelerate pricing out rate hikes in one year, but the broader fundamental picture remains tough for XAU/USD as central banks continue tightening policy around the world.

Fundamental divers over the past 24 hours

Gold technical analysis

On the daily chart, gold remains in a consolidative state ever since XAU/USD seemingly established support between 1787 and 1810. A falling trendline from March seems to have emerged. Prices are nearing this falling line. Immediate resistance also seems to be the 1869 – 1879 range. Gold’s next big move could occur after a breakout outside of these boundaries. Until then, the road ahead may remain choppy.

XAU/USD daily chart

This information has been prepared by DailyFX, the partner site of IG offering leading forex news and analysis. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.


The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer.

Start trading forex today

Find opportunity on the world’s most-traded – and most-volatile – financial market

  • Trade spreads from just 0.6 points on EUR/USD
  • Analyse with clear, fast charts
  • Speculate wherever you are with our intuitive mobile apps

See an FX opportunity?

Try a risk-free trade in your demo account, and see whether you’re onto something.

  • Log in to your demo
  • Take your position
  • See whether your hunch pays off

See an FX opportunity?

Don’t miss your chance – upgrade to a live account to take advantage.

  • Get spreads from just 0.6 points on popular pairs
  • Analyse and deal seamlessly on fast, intuitive charts
  • See and react to breaking news in-platform

See an FX opportunity?

Don’t miss your chance. Log in to take your position.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
liveprices.javascriptrequired
liveprices.javascriptrequired
liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.