The gold price fell for the first time in the last four trading days. However, downward pressure has eased due to ongoing tensions in the Middle East and a busy US economic calendar this week. For now, the yellow metal is consolidating its correction from five-month lows.
Focus is on US Treasury yields and tensions in the Middle East
There was some conciliatory news from the Middle East geopolitical front over the weekend. Despite this, investors are trading cautiously as the risk of war escalation remains. The gold price reached a five-month high of $1,997 on Friday. However, it started the new week with a slight decline. The re-rise in US Treasury bond yields also caused a decline in the gold price.
Meanwhile, geopolitical risks continue to support the safe-haven US Dollar against the gold price. US Treasury yields continue their upward trend as the decline in the bond market reversed at the beginning of the week. The supply-demand mismatch for US Treasury bonds due to the budget deficit and the risk of a government shutdown continues to push US Treasury bond yields towards the ceiling. Benchmark 10-year US Treasury yields have once again approached the 5.0% key level. Thus, he took control of the upward attempts on the non-interest-bearing gold price.
US data will have an impact on the gold price
Markets also remain cautious, bracing for U.S. growth and inflation data as well as earnings releases from some of the world’s largest technology companies later this week. High-level US economic data could have a strong impact on the US Federal Reserve’s (Fed) interest rate outlook in the coming months. It is also possible that it will ultimately affect the US Dollar and gold price dynamics.
Meanwhile, the US central bank has entered a ‘blackout period’ ahead of next week’s policy meeting. So markets will be watching the Middle East conflict closely as there will be no talk from Fed policymakers.
TDS: Shiny metal may be bearish
cryptokoin.comAs you follow from , the price of gold has risen amid increasing geopolitical crises. Gold needs more instability to sustain its rise, according to TD Securities strategists. In this context, strategists make the following assessment:
While the yellow metal is trading at $1,980, there will need to be further instability, such as conflict spreading to the wider Middle East, for the rally to continue. Given the ‘higher rates for longer’ policy and a firm USD, gold is likely to trend lower.
Gold price technical analysis: ‘Buy on the dip’
Market analyst Dhwani Mehta evaluates the technical outlook for gold. Gold has eased from the overbought zone of the 14-day Relative Strength Index (RSI) indicator. Thus, it started trading in the bullish zone. Additionally, it remains a ‘buy on the dip’ trade as it keeps the door open for a new rise. The initial supply zone will be at $1,988 (July 20 high). Moreover, above this it will retest the five-month high of $1,997. It will be difficult for gold buyers to exceed the $2,000 threshold.
On the other hand, a further decline in the gold price from the highest levels of several months would change the complexion of the situation. In this case, a sustained move below the intraday low of $1,963 is possible. The $1,950 psychological level will be the next apparent support for gold buyers. The last line of defense for them stands at $1,945, the October 19 low.
More wins are on the cards for the yellow metal!
The number of open positions in gold futures markets increased by approximately 5.2 thousand contracts for the fourth consecutive session on Friday, according to preliminary data from CME Group. Likewise, volume increased by more than 30 thousand contracts. Thus, it reversed the previous daily decline.
The continuation of the upward trend in the gold price on Friday was due to increasing open interest and volume. This leaves expectations for further gains in the very near term intact, according to market analyst Pablo Piovano. However, the next target for the gold price remains at the critical $2000 level.
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