The gold price remains under pressure as Fed policymakers predict another interest rate hike this year. Gold markets initially fell again in Tuesday’s trading. However, the day began to show some signs of life. This made us think that there might be a short-term jump in the market.
Yellow metal continues its decline under pressure
cryptokoin.comAs you follow from , the gold price continues to decline under the pressure of multiple headwinds. US Federal Reserve (Fed) policymakers support another interest rate increase for the remainder of 2023 on the grounds that a resilient US economy could slow progress in the fight against inflation. In addition, despite high interest rates, the strong improvement in the US Manufacturing PMI index strengthened the economic outlook.
The US economy is performing strongly depending on parameters such as labor market conditions and consumer spending. The manufacturing sector is underperforming. A meaningful recovery in factory activity would further strengthen the U.S. economy and make inflation more stubborn. This will require the Fed to raise interest rates further. Therefore, this means more pressure for the gold price.
Gold market technical analysis
Technical analyst Christopher Lewis explains what he sees in the technical picture of gold as follows.
Be careful: It’s only a matter of time before we get close to $1,800!
Gold markets fell significantly during Tuesday’s trading session. A.However, it returned to show signs of life again. In this way, the market seems to try to stand on its own feet. A.But frankly this is a broken market. At this point, a good sales opportunity Any rally should be viewed with serious skepticism.
Remember, gold markets are highly sensitive to interest rate markets, which have been out of control lately. The short end of the yield curve in the US showing rising rates is a toxic situation for the gold price. Moreover, it is possible that it will cause big problems for the market in the future. Therefore, I suspect it is only a matter of time before we make a bigger decision, possibly approaching the $1,800 level.
Things are tough for the shiny metal in the short term, but in the long term…
However, markets do not move in one direction forever. At this point, a little bounce for gold would make a certain amount of sense. So I think it’s a situation where you’re looking for rallies that are showing signs of exhaustion that you can sell. In this environment, you will let the market tell you when it is tired and then you will jump into it. The $1,900 level above is of course a big, round, psychologically important number that many people will pay close attention to. Therefore, it is possible that it will act as a bit of a ceiling at this point. Time will tell whether he will do this or not. But it’s clear that he’s a great candidate for this.
Longer term, I support gold’s rise. But I also realize that interest rates need to be resolved first. Eventually bond markets will calm down. This will be the first sign that the gold price can make a sustainable rally. Until then, things will be tough for those bullish on this market. But in the short term, some relief rally is possible after this brutal sell-off we’ve seen lately.
More losses on the cards for the gold price
Taking into account the advanced data published by CME Group for gold futures markets, the number of open interest on Monday increased by approximately 1.3 thousand contracts for the second consecutive session. In contrast, volume contracted by approximately 43.6 thousand contracts amid continued choppy performance.
The gold price continued its significant decline for another session on Monday. According to market analyst Pablo Piovano, this move comes against the backdrop of rising open interest, which is an indication that further losses could be in store for the yellow metal in the very near term. The analyst expects the next fight to be around the 2023 low of $1,804.
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