Quarterly Outlook
Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges
Althea Spinozzi
Head of Fixed Income Strategy
Technical Analyst, Saxo Bank
Gold (XAUUSD) is back below key support at 2,319 after failing to close above 2,350, which would have confirmed the resumption of an uptrend.
If Gold breaks below 2,291, it is likely to face a sell-off down to between 2,260 and 2,255, and possibly even lower to around 2,207, which is the 0.786 retracement of the leg up since March.
The strength indicator RSI has been showing divergence for quite some time, a sign of trend exhaustion. A correction is needed.
However, if Gold jumps back to close above 2,352, this likely bearish scenario would be negated, potentially reversing to an uptrend with a target of 2,400
Silver (XAGUSD) seems to be leading the way lower for Gold.
Similar to Gold, the RSI for Silver has also been warning about trend exhaustion for a few weeks.
The current sell-off has taken Silver down to the 0.618 retracement at 26.41, with potential to further decline to the 0.786 retracement and support at around 25.50.
A close above 27.75 will reverse this bearish move.