- Gold tries to rally but bears are lurking below $1,640.
- A resistance at 61.8% could be the catalyst for the next bearish push.
the price of gold has risen on the day as we head to the close on Wall Street. The yellow metal gained ground on Tuesday as bulls moved to the lowest levels in more than two years noted on the back of the rise in the US dollar and bond yields, which are hitting multi-year highs. At the time of this writing, the price of gold is trading 0.38% higher, having risen from a low of $1,621.91 to a high of $1,642.45, after falling a day earlier to minimum since March 2020.
The price of gold is trading below pandemic-era levels and as rate markets are now pricing in the possibility that higher interest rates will persist for some time while a steady stream of words of With the Fed likely to hammer on this point, analysts at TD Securities argue that gold prices may still have more to fall in the next leg of the rally cycle.
In fact, the increase in the persistence of inflation suggests that a restrictive regime may last longer than historical precedents, which argues for a more pronounced weakness. The combination of rising real and dollar rates, ongoing outflows from managers and ETF holdings are adding pressure on family offices and prop shops to finally capitulate on duration. analysts explained.
On Tuesday, a chorus of Fed speakers called for more interest rate hikes, even at the risk of slowing economic growth. On Friday, Philadelphia Fed President Patrick Harker said he believes the US central bank can reduce inflation without triggering a deep recession and high unemployment.
“We don’t want to do this in a way that crushes the labor market right now,” Harker told Bloomberg TV from Jackson, Wyoming, where Fed officials are meeting for a conference. “If there is a recession, it would be shallow,” he said.
Federal Reserve officials, St. Louis Fed President James Bullard and Chicago Fed President Charles Evan, advocated further interest rate hikes, even at the risk of slowing economic growth. Later, Minneapolis Fed President Neel Kashkari said Tuesday in an interview on WSJ Live that central banks are united in their determination to do what needs to be done to reduce inflation, and financial markets they get it: “There’s a lot of tightening going on,” Kashkari said.
For its part, the benchmark SP500 index erased gains of up to 1.7% in the early afternoon and hit lows last seen in late November 2020. It is headed for a negative close. The US dollar, as measured by the DXY index, is trading back in the 114 area, down from 114.47 as the day’s high.
Gold Technical Analysis
Price has corrected to 4-hour resistance at a 61.8% ratio correction. This could lead to a retest of the lows and a further decline if $1,621.20 gives way to bears.
Source: Fx Street