Rising US dollar put pressure on bullion demand. This marked the nine-month lows seen last week for the gold price. So, it was flat on Monday. Here are the details…
What’s next for the gold price?
Gold has suffered from the dollar’s rally after hitting its lowest level since the end of September a few sessions ago. It recorded its fourth straight weekly loss on Friday, with bets on steep interest rate hikes gaining traction following healthy US jobs data. The dollar hit a nearly 20-year high on Friday, keeping overseas buyers at bay. City Index senior market analyst Matt Simpson used the following statements:
Gold prices remain below $1,753 per ounce, with a drop to $1,720 on the cards. Although there is support near $1,730, any upside is likely to be a pullback at best. Gold has taken a huge dip and there comes a point where the market has to pause for a breather. That’s what we’re seeing underneath right now.
Atlanta Fed Chairman Raphael Bostic, who until recently was among the US central bank’s most dovish policymakers, said Friday that he “fully” supports three-quarters of a percentage point hike at the Fed’s next policy meeting later this month. Higher interest rates and bond yields increase the opportunity cost of holding non-yielding bullion.
Next drop predicted for precious metal
Gold price performs sluggishly, DXY retracement of daily high looks bearish. The Fed has already implemented restrictive quantitative measures, but the inflation rate is still intact. The precious metal is on the verge of witnessing a bearish break in one-week consolidation. Gold price carried forward the back and forth movement structure in the early European session. The precious metal is underperforming, but the downside is warranted in the rising bets on maintaining the status quo in the Fed’s July interest rate decision.
On a broader note, gold prices are hovering in the $1,730.73-1,752.49 range, analyst Sagar Dua said. The 20-period Exponential Moving Average (EMA) coincides with gold prices at $1,741.92. Also, the 50-EMA at $1,745.00 has turned flat. This points to a further consolidation. The Relative Strength Index (RSI) oscillates in the 40.00-60.00 range. The broader weakness in the shiny metal will accelerate further if the RSI (14) leaves the support at 40.00.
What do gold futures point to?
Open interest has resumed to the upside, according to preliminary data from CME Group for gold futures markets. Nearly 5.7k contracts were up on Friday. Volume followed suit. More than 68,000 contracts rose after two consecutive days of pullbacks. Gold prices recorded another fruitless session on Friday amid rising open interest and volume. It left the door open for the continuation of current sideline trading for the time being. Further declines in bullion should meet the next support at $1,721 per ounce in September 2021.
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