CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
US English

Gold analysis: Bullion feels the weight of rising Treasury yields – $1,600 in sight?

By Piero Cingari

15:28, 20 October 2022

Gold bullion bars and coins are seen for sale at Manfra, Tordella and Brookes, Inc. January 9, 2003 in New York City – Photo by Mario Tama/Getty Images

The price of gold might come under renewed selling pressure as yields on 10-year US Treasury bonds have risen to levels unseen since June 2008, and as persistently high inflation continues to keep the Federal Reserve in a remarkably hawkish stance.

Prices for gold were largely unchanged this week after falling by 3% last week. Yet they hit an intraweek low of $1,622/oz, perilously close to the 2022 lows of $1,615 seen in late September.

As US real yields continue to trend upward, macro headwinds for gold will persist until the Fed approaches the end of its hiking cycle.

Technically, previous attempts to re-test 2022 supports have all resulted in price action breaking through to the downside and hitting new lows. If bearish momentum intensifies, gold may breach the psychological level of $1,600/oz and then try to seek support in the $1,550 area.

Gold struggles in a positive real-yield world

Gold prices vs 10-year US real yields – Photo:, Source: Tradingview

This week, real yields on 10-year US Treasury inflation-protected securities (TIPS) reached 1.74%, the highest level since 2009.

A 10-year real yield of 1.74% means that an investment in this TIPS will give a return that is 1.74 percent higher than U.S. inflation for the next 10 years. Inflation in the US is expected to average 2.4% over the next 10 years, according to a market-based measure of long-term inflation expectations, or Breakeven rate.

Gold has a tough time when US Treasury real rates are rising, as investing in the bullion yields no interest. Due to this factor, the traditional negative correlation between gold and US real yields still holds true today, as illustrated above.

Real yields reflect Fed monetary policy aggressiveness: the greater the Fed's willingness to raise interest rates, the higher the real yields.


1.10 Price
+0.070% 1D Chg, %
Long position overnight fee -0.0080%
Short position overnight fee -0.0002%
Overnight fee time 22:00 (UTC)
Spread 0.00006


0.66 Price
-0.070% 1D Chg, %
Long position overnight fee -0.0071%
Short position overnight fee -0.0011%
Overnight fee time 22:00 (UTC)
Spread 0.00006


0.66 Price
-0.070% 1D Chg, %
Long position overnight fee -0.0071%
Short position overnight fee -0.0011%
Overnight fee time 22:00 (UTC)
Spread 0.00006


147.13 Price
-0.270% 1D Chg, %
Long position overnight fee 0.0111%
Short position overnight fee -0.0194%
Overnight fee time 22:00 (UTC)
Spread 0.010

September US inflation data, which was released last week, was a glaring letdown for gold bulls hoping for a swift Fed reversal. Inflation measured at the headline level came in at 8.2% year-on-year, down from 8.3% in August; however, core inflation continued to kick higher to 6.6%, up from 6.3% in August and exceeding market expectations of 6.5%. US core inflation is at its highest level since August 1982, and its rising trend continues to justify the Federal Reserve's ultra-hawkish stance.

Money markets are pricing in an increase of 75 basis points in November, followed by a hike of nearly 70 basis points in December, with US interest rates expected to peak at 5% in March 2023. Further declines for gold are likely if investors' expectations for future rate increases continue to rise from here.

What is your sentiment on Gold?

Vote to see Traders sentiment!

Gold price analysis: Key levels to watch

Gold daily chart technical analysis – Photo:, Source: Tradingview

On the gold daily chart, the price action is testing the bearish trendline from October. If the bearish momentum picks up again, the possibility of a retest of the 2022 lows at $1,614 might come next.

Price breakdowns have consistently occurred in previous attempts to test 2022 lows. The support level of $1,784 was breached by gold early in July, and then the bullion continued its decline for another 5.7% to reach $1,680 on July 21.

The support level of $1m680 was broken by the bearish price action once again on September 15, which was followed by a decline of 4.1% to reach the lows of $1,614.

A break below $1,614 could set the stage for another leg of gold's decline, with the possibility of a return to the $1,560-1,570 region (end March-early April 2020 support).

Markets in this article

2045.79 USD
4.48 +0.220%

Related topics

Rate this article

Related reading

The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
Capital Com is an execution-only service provider. The material provided on this website is for information purposes only and should not be understood as an investment advice. Any opinion that may be provided on this page does not constitute a recommendation by Capital Com or its agents. We do not make any representations or warranty on the accuracy or completeness of the information that is provided on this page. If you rely on the information on this page then you do so entirely on your own risk.

Still looking for a broker you can trust?

Join the 570.000+ traders worldwide that chose to trade with

1. Create & verify your account 2. Make your first deposit 3. You’re all set. Start trading