Weekly Market Analysis / 15 - 19 November 2021

Markets are expected to turn quiet after high-tier data releases from the US on Wednesday - a deep correction if $1,850 becomes resistance

Gold struggled to build on the previous week’s inflation-fueled rally and closed in negative territory on Monday and Tuesday. Although the yellow metal managed to regain its traction on Wednesday, it failed to gather enough bullish momentum to clear the $1,870 hurdle and dropped toward the lower limit of its weekly range before settling below $1,860 ahead of the weekend. 

  • XAU/USD could come under renewed bearish pressure if $1,850 support fails.

  • Gold reversed its direction after climbing to multi-week highs above $1,870.

  • Markets are expected to turn quiet after high-tier data releases from the US on Wednesday.

What Happened Last Week

  1. Rising US Treasury bond yields made it difficult for gold to continue to push higher at the start of the week. The benchmark 10-year US Treasury bond yield advanced to fresh multi-week tops near 1.65% and helped the dollar preserve its strength. The US Census Bureau reported on Tuesday that Retail Sales increased by 1.7% on a monthly basis in October, compared to the market expectation of 1.4%. This print reminded investors of the strong goods inflation.

  2. With gold rising 0.9% amid a 3% decline in the 10-year US T-bond yield on Wednesday, the inverse correlation between gold and yields became a driving factor once again. Confirming that view, the pair started to retreat as the 10-year yield steadied around 1.6% in the second half of the week.

  3. The US Department of Labor’s weekly publication revealed that there were 268,000 initial claims for unemployment benefits in the week ending November 13.

News to Follow

  1. IHS Markit’s preliminary Manufacturing and Services PMI surveys for November will be featured in the US economic docket on Tuesday. Ahead of Wednesday’s data dump, the market reaction to these data is likely to remain subdued.

  2. The US Bureau of Economic Analysis will release its second estimate of third-quarter Gross Domestic Product growth alongside the October Personal Consumption Expenditures (PCE) Price Index, Personal Income and Personal Spending figures. The US Census Bureau will publish the monthly Durable Goods Orders report as well.

  3. In the second half of the week, trading conditions will thin out due to the Thanksgiving holiday in the US and XAU/USD could fluctuate between technical levels heading into the weekend.

Short-Term Outlook

  • On the upside, XAU/USD could target $1,872, $1,888 and $1,901$.

  • First support now aligns at $1,850, $1,830 and $1,820.