Will gold continue to ignore rising US yields?

4.11.22 - Interest-Rate Surge Ripples Through Economy

Gold last traded at $1,950 an ounce. Silver at $24.89 an ounce.

NEWS SUMMARY: Precious metal prices rushed higher Monday despite rising interest rates and a firmer dollar. U.S. stocks fell on growing investor concerns over tighter monetary policy from the Federal Reserve.

 -FX Street

"Despite the broad-based dollar strength and the sharp upsurge witnessed in US Treasury bond yields, the yellow metal managed to hold its ground on safe-haven flows and ended up closing in the upper half of its weekly range above $1,940....

The dollar preserved its strength on Fedspeak but the precious metal stayed resilient. St Louis Fed President James Bullard argued on Thursday that the policy rate would need to go as high as 3.5% to fight inflation....

On Tuesday, the US Bureau of Labor Statistics will release the Consumer Price Index (CPI) data. On a yearly basis, CPI is expected to advance to a fresh multi-decade high of 8.3% in March from 7.9% in February.

As it currently stands, the CME Group FedWatch Tool shows that markets are pricing in a 56% probability of a total of 100 basis points (bps) rate hike in the next two meetings. A stronger-than-expected CPI print could ramp up the odds for two successive 50 bps Fed rate hikes and lift US T-bond yields even higher.

Gold made a daily close above the 20-day SMA for the first time in two weeks on Friday. Additionally, the Relative Strength Index (RSI) indicator rose slightly above 50, pointing to a bullish tilt in the technical picture.

On the upside, $1,950 aligns as first technical resistance. In case gold rises above that level and starts using it as support, it could target $1,970."