-1688115180.png)
Gold Correction Continues
Gold prices are seeing some weakness today against the backdrop of a stronger US Dollar. The greenback has been well bid on the back of better-than-forecast GDP data yesterday and a slew of hawkish comments from Fed’s Powell this week. With traders eyeing a fresh .25% hike in July, metals have weakened further this week and look poised for more downside while the USD rally continues.
Gold prices are now down around 8% from the YTD highs. A resurgence in hawkish Fed expectations in recent weeks has weighed heavily on gold prices. Additionally, with equities showing resilience, traders have been caught between moving capital into stocks or into USD. Meanwhile, gold has seen a steady outflow of demand.
Near-Term Risks
Given that the market is now moving firmly towards pricing in a July hike, however, this does create some near-term risks. If we see any data which challenges this narrative, USD is vulnerable to a downside shock which would see gold prices rising. One event to watch in particular will be next week’s US labour-market data. If we see any surprise weakness in those readings, this might cause some upward movement in gold prices-near-term.
Technical Views
Gold
The reversal in gold from the 2069.41 level has seen the market trading sharply lower. Price has recently broken below the 1973.51 level support and the bull channel lows. While below here, the focus is on a test of the 1871.04 level support next with 1805.18 sitting below as deeper support to note.
.png)
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.