Strong US jobs information on Friday raised expectations that the Federal Reserve will continue to raise multi-rate interest rates, which strengthens the dollar. As a result, gold prices fell to a one-week low on Monday. We have compiled analysts’ gold claims and market comments for our readers.
Gold assumptions: locked in downtrend for now
Spot gold hit its lowest level since Oct. 3 at $1,677. At the time of writing, it was trading at $1,680, down 0.87% daily. US gold futures fell 1.35% to $1,686. In the middle, the dollar index (DXY) rose 0.2%. Thus, it made gold more valuable to buyers holding other currencies. IG market strategist Yeap Jun Rong has this to say on gold assumptions:
Gold prices are taking cues from last week’s rise in rate hike expectations, driven by the warmer-than-expected US jobs report. The yellow metal is locked in a downtrend for now.
Gold claims: Spot gold will drop to $1,660 to $1,674 range
Gold is generally accepted as a measure against inflation. However, rising US interest rates increase the opportunity cost of holding non-yielding gold. Koindeks.comGold prices have dropped more than $350 since it passed $2,000 in March amid aggressive monetary tightening by the United States.
Reuters technical analyst Wang Tao expects spot gold to fall in the $1,660 to $1,674 range. Meanwhile, SPDR Gold Trust Holdings, the world’s largest gold-backed exchange-traded fund, posted its biggest exit since late September, down 2.03 tons on Friday.
“Gold crumbles in critical reinforcement, eyes are waiting for a strong break”
Technical analyst Ross J Burland’s gold claims and technical analysis point to the following levels. Gold price is under pressure at the beginning of the week due to the strong US dollar at the open. A strong US labor market has strengthened bets on higher interest rates as traders prepare for the information.
Gold is on the verge of a precious break below $1,690. Because of this, the bulls will emerge or face strong opposition the next day. Therefore, traders considering $1,675 will need a breakout.
However, according to the 15-minute chart, it is possible for the bulls to push the price above the trendline resistance for the bears’ recent attempt at $1,700 commitments. In this direction, hill formations are rising. Therefore, there will be liquidity above the highs as well. This will create a potential trapped market ahead of the US CPI.
“More fixes on cards for gold”
Flash data for CME Group’s gold futures markets posted open interest rate hikes for the second straight session on Friday. However, this time there was only 756 contract increases. Volume followed suit. Thus, nearly 18.8k contracts rose after three consecutive days of decline.
Market analyst Pablo Piovano draws attention to the following points regarding the latest movement of gold.
Friday’s negative price action in gold prices was due to increased open interest and volume. This allows the downtrend to continue in the very near term. In the middle, the yellow metal risks extra weakness as it remains below recent highs in the $1,730 region.