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It should come to no shock as to why the USD is getting stronger after the Fed's recent statements. The fact that we are seeing a massive shift of money into the dollar helps us determine the overall direction of the safe-haven This can also cause a reverberation throughout other markets as well, such as the gold bullion. So, before you start your 2022 off, we suggest taking a look on how to trade gold right now amidst a powerful greenback.

Higher Treasury Yields

US 10-year bond yields spiked to 1.6710% before resting at the 1.6500s%. Yields are up .035% on the day as of writing this. If we continue to see growth like this, investors might find more security in the bond market. And that could lead to less money in stocks and gold. The Fed will meet again in a few months to talk about future monetary policy which has been a main driver in bond yields in recent months as higher interest rates means stronger dollar.

The 10-year treasury is still under under the highs of 1.74% that were reached back in March of 2021.

https://www.cnbc.com/quotes/US10Y

Higher Interest Rates

It has been 3 years since an interest rate hike, and there is an expectation of one to be announced in the Fed meeting in March. If we do see the three hikes Powell promised in 2022, we could be in for a year of bearish activity in the inflation-hedger, gold.

How To Trade Gold

It seems that all of the fundamental reasons that should have driven gold higher are now fading. The combination of higher interest rates, stronger treasuries, and the end of Fed tapering will all contribute to the better performance of the dollar. This will directly affect XAUUSD in a negative way and cause lack-luster performance throughout the year. Additionally, a more hawkish approach in monetary policy will only hurt gold even more.

A possible head and shoulders pattern could be forming on the 1D as well as being caught up in a wedge pattern. Should price fail to move above resistance around $1825, head and shoulders will form suggesting a bearish move. Some analysts expect lower lows to the $1600s during the year which seems likely if the metal breaks under its wedge pattern.

To read more content on gold, check out our other articles here.

Why will US markets be flat or worse?

On December 15th the Federal Reserve Board of Governors made a press release detailing their plans to reduce their open market operation purchases in 2022. The central bank also predicts several rate hikes in 2021, and continuing on into 2023. When you combine this with the current overvalued state of the market, there's good reason to believe that we will see a minor correction, or a mostly flat market.

1. Fed Tapers Asset Purchases.

Fed Open Market Operation purchases of bank bonds and other assets of buoyed up the stock market. SPY and Fed assets look like virtually the same line. Running a correlation on SPY and Fed purchases from 1/2/2021 yields an astounding correlation between the two of 0.8537, or 85.37%. We hardly EVER see this much influence by the fed

2. Interest Rates

Rates have an inverse relationship with the market. When rates go up, stocks go down. What we want to know is how much rates will increase and how many hikes there will be. The Fed has indicated that there will be three hikes in 2022.

3. Overvalued Stocks?

Three Alternative Markets to Consider:

  1. King Dollar: The dollar has had an excellent run, as most FOREX traders know. But for all the reasons I mentioned above, you can expect it to do better in the long run. Less FED asset purchases and rate hikes will increase the USD's value relative to other currencies and traders should expect further gains in the new year
  2. Gold and Gold Miners: Downward pressure on US Equities and the FED backing off of support may scare investors out of the traditional equities. Two options for the prospective traders is your standard XAU pairs and gold miners. If you are unable to trade stocks on US markets, I recommend looking for gold miners on exchanges that are available to you in your own country

3. Emerging Markets and Heavy Industry related currencies in South East Asia and Pacific Economies
AUD, NZD will benefit form the gains in emerging markets in South East Asia. This year alone, Vietnam a 34% increase in their largest stock index. Because these are the largest regional speculative currencies in the area, FOREX traders looking to benefit from the gains in emerging economies would do well to consider AUD and NZD pairs.

For questions and comments, you can reach the author at smstreb97@protonmail.com or through the A1Trading discord at @smstreb97

12/21/2021

Gold's performance has been mostly red after mixed signals from the Fed and heavy volatility towards the holidays has taken its toll on the precious metal. Discussions and outlook remain uncertain as price action remains unpredictable.

Global market outlook

Mixed

Retail sentiment

Our bias

The market is too mixed right now to really pick a clear direction, at least for the entire year of 2022. Without a clear statement from the Fed, we can only measure the possibilities. It looks like the metal may start off bearish in 2022, after looking at the behavior in the COT reports along with the announcement from Biden to keep the economy open regardless of the new omicron variant.

Trade Setups

12/17/2021

The tapering process has finally been started as Fed chairman, Jerome Powell testified that they will speed up the process where by March, purchases will be reduced to $0. This has caused a sell off in the equities market but has inversely affected the price of gold.

Our outlook

The bulls are likely focused on inflation being as high as it is along with the quicker tapering process. As jobs numbers near full employment, economic slowdown seems unlikely. So, the only way gold can find more demand would have to be from those two factors mentioned above. Judging by this year's performance, it seems that gold will probably not be able to catch enough momentum from this news alone and may come down to support on the two key moving averages.

Trade Setups

XAUUSD

Price came up to test $1814 after crossing above the $1800 level on the 1D chart. This bullish move above the 50 and 200 DMAs could be promising for the precious metal, however, gold will have to close above these moving averages to increase the probability of a continuation to the upside. So far this year, gold has had very short-lived rallies, so it's important to look for indicators that will act as more long term catalysts.

Hey everyone! Welcome to this week's forex forecast for the week ending December 17th, 2021. I'm TraderBart with A1 Trading, and this week I'll be looking at AUDUSD, EURUSD, EURAUD & XAUUSD. This will be the final WFF of 2021 as I'm going abroad to spend time with family. Hope everyone has a Merry Christmas and a Happy New Year, and I will be back from mid-January to continue this series of articles.

AUD/USD

Price recently broke out of the ascending channel, making a touch of the 0.70 key horizontal level which dates back all the way to September 2018, and is now on its way to potentially making a touch of the ascending channel. Look out for whether we see price re-enter the channel, suggesting further bullish moves towards the channel's top OR if we see price reject the channel's bottom, suggesting further bearish moves towards 0.70 and potentially new recent lows.

EUR/USD

Price is forming a triangle pattern following the break of the descending channel. Watch out for a break of this pattern, if we see a break above, look out for the retest and rejection before potentially going long. If we see price break lower, look out for the retest and rejection before going short. A break above 1.14 opens up price to 1.16; a short-term key level.

EUR/AUD

After breaking out of the ascending triangle pretty early, price has made its full move but is now retesting the pattern's resistance at around 1.57 which is the same as the ascending triangle from May earlier this year. Watch out for a rejection of this level, where following successive price action confirmations would be a potentially good time to go long on this pair.

XAU/USD

Gold continues to consolidate for another week, still failing to break below 1765 suggesting its potentially waiting for a major catalyst to create a new trend in the market. Price will likely be slow during the Christmas and New Years period.

For any questions or comments, you can reach me at @TraderBart on Telegram or @TraderBart#2638 through the A1Trading discord.

11/30/2021

Gold price rose 0.59% on the day at the time of writing this in light of the uncertainty surrounding the Fed's policy towards the new variant and tapering of asset purchases.

Our outlook

I think gold will likely see some green today as the virus concerns can cause a slow in growth since the US is already restricting travel to certain places and hurting airlines and other business. This also means we could see a delay in the Fed's decision to begin tapering, although a week ago, a sooner taper seemed definite. So, just going by the news, we may be looking at a potential rebound for the precious metal.

Trade Setups

XAUUSD

Gold is now resting on the 200 and 50 DMAs which has held up relatively well the past six days of trading. This period of consolidation could also be leading up to a potential high-volume move either up or down, but after considering the US's current stance toward the virus and the upcoming Fed meeting, it looks like the upside is more in the favor of gold here. Resistance is in the $1820s and support can be found in the $1750s.

Check out my previous Gold deep dive from early October here to see how we have progressed...

Technical Outlook:

There is an overall bullish flag pattern trend on Gold, as we saw an impulsive move from 1450 to 2075 between March and August 2020. Ever since hitting the all-time high (ATH), price has fallen into a descending channel hitting as low as 1675 three times. In May 2021, we saw a potential move back to ATH's but this was unsuccessful as price did re-enter the channel. Now, we are seeing price reach these recent highs around 1900, suggesting could be on it's way to try to successfully break through recent highs and back to ATH's above 2000+.

Looking at recent moves over the past couple of weeks, you can see price has been breaking through every short-term and long-term key horizontal level. 1765 acted as clear resistance, once broken became new support. 1800 is currently being retested as new support, just like 1765 it was clear resistance. Look out for how price reacts to this level, a break lower could suggest further bearish moves to happen and opens up price to 1765. If price rejects and pusher higher, this level is confirmed as clear support and a bullish move towards 1835 is likely.

Retail Sentiment:

Looking at retail sentiment, most traders are actually long on this pair with the majority being 74% long. This means that traders are actually looking to catch the move I just described above. Traders who trade against this concept (against retail traders) could actually see a bearish move more likely now, as institutions will likely be pushing price towards liquidity voids where traders going long will have their stop losses.

Upcoming News:

Over the next week and a half, we have many USD economic data coming out. The quarterly GDP rate is coming out expected at a 0.2% uptick from 2.0% to 2.2%. We have the PCE Price Index expecting a 0.2% uptick, and alongside these we have a couple "smaller" macroeconomic data releasing including personal income and spending figures.

Most importantly though, we're having the FOMC Meeting Minutes where we will get clues on when they plan on hiking interest rates. Recall that the Fed has already started to taper asset purchases confirming they are en route towards tightening possibly by mid-2022. However, in the recent dot plot forecast, it was indicated that half of the committee were not so eager about hiking next year yet.

Fundamental Outlooks:

Bearish Gold:

Bullish Gold:

11/22/2021

Recent comments about tightening monetary policy early caused gold to slip today by 1.61% at the time of writing this. Governor Christopher Wallace has called for this policy of early tapering which could be followed by a rate hike soon after.

Our outlook

Gold could be in trouble in the short term, but this is just another call-to-action that hasn't been put in place yet. The tapering process is also not an extreme measure comparatively to the amount of asset purchases the Fed is making each month. COT data showed us that money is still flowing into this precious metal which could mean that we could be setting up for another buying opportunity.

Trade Setups

XAUUSD

Gold could find support here around $1818 where there is clean support. We also have the 50 and 200 DMA just below in the $1790s should price continue to fall. If today's candle could pull back hard enough to show rejection from the lows on this 1D timeframe, we could see an increase in buying volume.

Hey everyone! Welcome to this week's forex forecast for the week ending November 26th, 2021. I'm TraderBart with A1 Trading, and this week I'll be looking at GBPUSD, GBPAUD, EURAUD & XAUUSD.

GBP/USD

Waiting for price to make the next lower low in this medium-term descending channel. Currently, price is struggling to successfully break lower below 1.342. However, we are seeing a short-term bearish flag pattern and price is at the bottom of this ascending channel, expecting a pattern completion and a break lower soon. Looking for targets around 1.33 to make the next lower low.

GBP/AUD

Price has made a successful bullish move following the touch of the bullish breaker block, and currently sitting below a short-term key horizontal level 1.858. If we see price break above this level, look for a retest followed by successive rejections for a continued bullish move. If we see price struggle to break higher, and instead reject this level and head lower, it's likely we could see further bearish moves, and potentially a move back below the breaker block marking this zone no longer valid.

EUR/AUD

Price has fallen underneath the resistance of the ascending triangle pattern back in May, and in the past two weeks, we have seen this same level continuing to act as resistance. Currently, price is once again making its way back to this level again. A break above this level suggests further bullish moves to follow, but further rejections could suggest a move back to new recent lows.

XAU/USD

Gold nearish the bottom of this recent ascending channel, so I'm expecting a bounce off this line and a potential move up higher. We have been seeing price break recent highs such as 1800 and 1835, we did reach as far as 1880 the LV I've been mentioning in the past weeks. Looking for price to continue this move higher.

11/18/2021

If COT continues to show us more buying, we might be able to see a $1900 gold bullion price in the coming weeks. Price is now stalling around the $1860s even though institutions are buying it up.

Our outlook

As inflation fears come back into view and are in the forefront of investors' concerns, we may see more attention on this precious metal. COT is definitely showing us that big money is hedging their bets on riskier plays with long bets on gold. What's important is to keep an eye on COT which will report tomorrow. If we see more long contracts bought and less shorts, we could see a higher gold price next week, or above the $1860s.

Trade Setups

XAUUSD

Gold is stalling here in the $1860s probably due to the heavy resistance level in the way, but price came back up to test this level again. This second test is a bullish sign for the pair as we may see a break to the upside this time. Support still lies under at $1830s with further resistance around $1900.

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