Gold fell early on Monday, as traders react to the higher interest rates in the bond market.
Gold Faces Pressure as Rising Yields Weigh on Sentiment
The gold market has fallen pretty significantly during the trading session on Monday as we've lost over 2% at one point. And really with that being the case, it's not a huge surprise to notice that the interest rates in America have risen.
Top Regulated Brokers
With that being the case, I think you've got a situation where the market is continuing to look at the situation in the Middle East and of course concerns about supply chains as a major problem for gold and for rates as rates rise that causes major problems.
The gold market of course is a non-yielding market so that means that it will not be a market that does well when money managers can get a solid return just by putting money away in a safe place like the bond market.
Technical Levels and Market Headwinds
If we do fall from here, the 200-day EMA is a major floor in the market that I think continues to offer support. If we were to break above the 50-day EMA, it opens up the possibility of a move to the 4,800 dollars level.
Ultimately, I do like gold from a longer-term standpoint, but as things stand right now, I think it's very difficult to get big with a position size mainly due to the fact that gold of course is going to have to deal with all of the uncertainty around the world.
Most of you have probably been taught that gold is a safety asset and it can be, but when there's such a strong return to be had on owning bonds, it really works against gold. Because of this, I think the rallies are still to be looked at with suspicion. Longer-term, I think there's enough going on out there that eventually gold will rally, but we have got to get through this noise in the Middle East first.
Ready to trade today’s Gold prediction? Here’s a list of some of the best XAU/USD brokers to check out.