The Precious Metal Loses Steam: What Now?

Last week was not kind to gold, which seems to have lost the upward momentum it had at the end of August. Tensions between the United States and Iran are contributing to this decline, but it is mainly the more hawkish stance taken by the Federal Reserve (Fed) during Jackson Hole that has dampened demand for the precious metal. Additionally, rising global interest rates have further pressured gold prices. The metal’s price has fallen below its 100-day simple moving average (red line), now at $4,360, and also broken through the 50% Fibonacci retracement level from July to August ($4,328). This suggests a more bearish trend for gold, with the loss of all upward momentum seen in August. Technically, the situation is not looking good, as few supports are left beyond the 61.8% Fibonacci retracement level ($4,241), which could lead prices to consolidate around $4,000-$4,130. The global financial landscape is also contributing to this decline, with US 10-year yields surpassing 4.80%, their highest level since January last year, in response to rising bond rates in other regions like Europe and Japan. This multipolar situation is driving inflationary pressures and may lead central banks to raise interest rates further down the line. Understanding gold’s movements within this current economic context is crucial as multiple factors are interplaying to influence its behavior. Source: ForexLive (InvestingLive)