“Dancing on the Abyss” Here are the Next 4 Levels of Gold Price!

British Prime Minister Liz Truss resigned after a record short mandate fraught with extreme volatility. Gold, both in US dollars and British pounds, stagnated amid this development. However, gold remains at a ‘critical juncture’, albeit with a lack of reaction or unresponsiveness, according to experts. Also, the yellow metal risks another strong sell-off.

Why did the markets not react to the developments?

In the wake of a failed tax cut budget that has thrown financial markets into chaos over the past few weeks, Truss has faced open rebellion within his own Conservative Party. Spot gold, priced in US dollars, was largely unchanged following the resignation. It later rose 0.72% on the day to $1,641.60. Spot gold denominated in British pounds was also unchanged. However, prices fell 0.06% to £1,451.13 during the day.

According to DailyFX strategist Michael Boutros, the main reason for this lackluster reaction is that markets have priced the news largely before it even happens. Boutros cites a report by British finance minister Kwasi Kwarteng. In this context, he shares the following assessment:

When we got our first resignation last week, the writing was on the wall. They were not going to launch all these new tax cuts and attempts to aid power politics. It was clear that this was not going to work. A random trade based on sterling will be open to great volatility. Therefore, investors need to accept this before going in.

“Gold is still at a critical point”

Gold is currently at a crossroads. Therefore, it is possible that subsequent price levels will significantly affect future price movements. Michael Boutros says the following in this regard:

The precious metal is still at a critical point. If this thing breaks the January 2020 high of $1,611, that’s a big deal indeed. If it closes below this level, there is nothing to hold $1,560 or even $1,500.

“Game over if gold closes below this”

Koindeks.com As you follow on , gold came very close to falling below this level last month. However, it managed to turn things around at $1,614. Boutros continues his statements in the following direction and warns investors:

If we close below that, it’s game over. Because the bigger position for gold has been the double peak formation. If this formation, which includes the 2020 and 2021 highs, is correct, the measured move would be true to $1,300. Risk below these levels is truly wasteful from a long-term perspective for bullion.

“We will dance on the edge of the cliff until we do this”

On the upside, gold needs to close above $1,730. “We’re going to dance on the edge of the cliff until we do,” says Boutros. The good news is that the base place is starting to look better for the precious metal. Boutros explains these views in the following form:

It is possible that we may finally get a quote for the yellow metal. Whether it’s an increase in market turmoil, a larger drop in equities, or a disruption in the war. It’s hard for me to see an ongoing sale here.

Also, the end of the US dollar rally is great news for the expensive metal struggling under the weight of the stronger dollar. According to Boutros, the biggest problem is that we’re facing this decline at and below because we continue to see interest rate expectations rise. Boutros concludes his assessments as follows:

The expected terminal rate for Fed funds has now increased from 4.6% to 5%. The dollar is a bit depleted here. Enough news will only be very affordable news for the dollar.

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