Gold Could Drop To These Ugly Levels!

As the outlook on the US economy changed, the gold price remained unclaimed after a $40 decline. Gold fell more than $40 after better-than-expected US retail sales on Thursday. And analysts are now saying that prices are in uncertain territory as the US economic outlook changes ahead of the Federal Reserve interest rate announcement. Details cryptocoin.com‘in.

Gold prices

US retail sales increased 0.7% after falling 1.8% in July, beating expectations in August. Market consensus calls had predicted a 0.8% drop. Phil Streible, chief market strategist at Blue Line Futures, told Kitco News: “The biggest catalyst for the sale of gold was the retail sales figure. “When you take the economy and cut it on the cake, part of measuring the economic strength of the US is the retail sector,” he said. Streible noted that a stronger retail sector could mean a more hawkish Federal Reserve down the road. Streible said:

The surprise recovery in retail in August may trigger more hawkish comments from the Fed. Narrowing and higher rates have come a little closer. The retail figure is unlikely to affect the Fed’s interest rate next week. But the central bank will admit that they monitor interest rates.

There was a lot of technical damage as gold fell more than $40 to trade near the $1,750/ounce level where it could find support. At the time of writing, December Comex gold futures were trading at $1,756.90, down 2.11% on the day. “I’m not sure if the gold will recover from here,” Streible said. Nobody cares. There is a lot of overhead resistance between $1,795-1,810. Downside support is just below $1,700,” he said.

stagflation effect on gold

Daniel Ghali, commodity strategist at TD Securities, said it is a matter of curiosity whether gold can find new buyers, especially with the stagflation headlines that are trending in the media. Analyst says:

If you were to follow the number of stagflation-themed news, you would understand that it is part of the narrative of the market and you can expect it to translate into gold inflows. Money managers find better deals out there. Gold prices found support at $1,750, a technical support range. Gold will stay anchored near the $1,800 range for a while. We’re seeing little speculative interest in gold while ETF holdings remain largely unchanged.

OANDA senior market analyst Edward Moya added that gold bulls may be in for a big disappointment:

Over the past two weeks, gold has failed to rally much of its rally despite increased caution calls for US equities. Gold has fallen into the danger zone and it could easily drop to the $1,700 level. Gold technically and if prices close below the downward sloping trendline (around $1,750) from last summer’s record high, it could be outrageous for bullion holders. Gold will now continue to be volatile as it has clearly broken out of the consolidation pattern.

As this week of trading draws to a close, all eyes are on Wednesday’s Federal Reserve interest rate meeting. Moya says:

The US economy is still heading in the right direction and this will allow the Fed to remain in cruise control for a few more months. At next week’s FOMC meeting, it’s likely Fed Chairman Powell will reiterate that they will shrink before the end of the year. The November contraction will be priced in broadly if the data continues to show that the economy is rapidly moving beyond the delta volatile effect.

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