- With US dollar and Treasury yields rising, the gold price was one of the main victims, falling below the $2000/oz area.
- The precious metal carries no interest in holding it, so its appeal diminishes when yields rise, and investors can earn higher yields on bonds.
- Selling operations to reap the profits the gold price XAU/USD has often hinted at the possibility of it happening at any time pushing prices towards the support level of $1975 per ounce, the lowest it has been in three weeks.
The correction in the gold price has room to continue if the odds of a Federal Reserve hike next month continue to rise or bets on a US interest rate cut subside, although it's hard to imagine any major losses because the easing cycle has only been delayed, not exited off course.
With the continued purchases by global central banks led by China, demand for the bullion is unlikely to dry up.
In the stock market, there has been a "flight to quality" recently, with investors turning to the stocks of big tech companies that are almost seen as safe havens in a rocky economic environment. A handful of tech giants are essentially crippling the entire market, raising red flags, and amplifying the warning signs of excessively rich valuations. In contrast, Chinese stocks fell again after a frenetic rally in state-owned companies, leaving traders looking for catalysts to drive the next round of gains.
According to trades, the benchmark CSI 300 ended a jump driven by a rise in artificial intelligence and state-linked stocks as the focus returned to China's lackluster economy. As a result, trading volume in the mainland market fell below a key mark, while volumes in Hong Kong also shrank. And the change in sentiment suggests that investors remain cautious about Chinese stocks even as the authorities pledged to improve the valuations of state-linked companies and vowed to allow them to tap into more capital. Beijing's strained relations with Washington and the risk of sudden changes in policy are among the long-term concerns.
Gold Technical Outlook
According to the performance on today's chart below, the stability of the gold price below the psychological resistance level of $2000 will increase the selling opportunities to move toward the support levels of $1960 and $1945, and these levels confirm a change in the direction of the gold price to a bearish one. On the other hand, the bulls will not have the opportunity to regain control without moving above the $2000 psychological resistance again.
The price of gold will be affected today by the level of the US dollar in reaction to the results of the US data, the weekly jobless claims and the reading of the Philadelphia industrial index, and the number of existing US house sales. Along with a round of statements by several US Federal Reserve Bank policy officials, which confirms that the US central bank is determined to raise interest until reaching its target for American inflation.
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