Gold prices found support around $1,970.00 as demand for safe-haven assets continued. Investors are focusing on US Q3 GDP data, which will provide an undertone for the Fed’s interest rate outlook. Fed policymakers have consistently supported keeping interest rates unchanged.
US growth data will be the focus of investors
Gold prices returned from psychological resistance due to the impact of rising long-term US Treasury yields. The precious metal aims to recapture the highest level of the last five weeks as Israeli-Palestinian tensions keep alive concerns that conflicts will increase in the Middle East. The yield on 10-year US Treasury bonds rose to 5%, the highest level in recent years, on expectations of stronger US economic data to be released this week.
Investors will curiously watch the growth rate in the July-September quarter, which will determine interest rates by the end of the year. cryptokoin.com As we reported, the data in question will arrive tomorrow. An optimistic growth rate would indicate strong labor market conditions, solid consumer spending, and a recovery in economic activity despite the Federal Reserve’s (Fed) tight monetary policy.
Gold prices will rise, but…
Gold fell on Monday as the yield on US 10-year Treasury bonds rose. However, it is up nearly 9% in the past two weeks as investors flock to the safe haven. Investors are tracking growing unrest in the Middle East and awaiting U.S. economic data. High Ridge Futures metal trading director David Meger comments on the developments as follows:
High yields continue to be a drag on gold prices. However, we believe that geopolitical tensions and uncertainty in the Middle East will continue to increase prices. If inflation data is higher than expected, concerns that interest rates will rise will increase. This could lead to a downward reaction in gold. However, the safe harbor demand will come into play after this reaction.
The market needs consolidation!
The yield on the benchmark 10-year US Treasury bond rose above 5.0%. Thus, he reached the milestone in July 2007. This reduced the appeal of non-returnable gold bullion. Ole Hansen, head of commodity strategy at Saxo Bank, comments:
The market is in need of fundamental consolidation after the strong rally of the last two weeks. It is equally important to see what is happening in the US bond market. Because we are seeing a significant jump in US yields. If we start to see ETF investors return, who have been significant sellers since June, this could be the next rally for gold.
Gold technical analysis of prices
A.gold is the first thing most people run to It is a shelter!
Technical analyst Christopher Lewis explains what he sees in the technical picture of gold as follows. Gold markets pulled back slightly during the trading session on Monday. However, it later returned to rally again as there are many reasons to believe that gold will continue to attract interest. Ultimately, when we look at the gold market, we see that we have been very bullish for the last few weeks. This, of course, makes perfect sense in an environment where there is a war in the Middle East. Because, all else being equal, gold is the first security trade most people run into. However, we’ve gone a bit overboard at this point. Moreover, it is obvious that the $2,000 level continues to create some noise.
At this point, it should be noted that gold is forming a massive shooting star in that area. But landing under the shooting star was ruled out pretty quickly. So it looks like we’re going to consolidate in this general environment now. If we break below the low of the trading session on Monday, we are likely to break down to the 1,950 level.
These levels are on target for gold prices
If we break above the shooting star in the Friday session, we will open the upward door. It would then allow gold to threaten recent highs. It opens the possibility of a move towards the $2,050 level, perhaps even higher than that. At this point, I think all it takes is another negative headline to get more traders into this market. Having said that, we are so overextended that a pullback makes perfect sense.
The retreat will most likely not be an opportunity to stay for a long time again. But having said that, gold will continue to move based on the latest headlines more than anything else. However, you should keep in mind that bond yields also come into the picture, although it’s not always a 100% negative correlation, as rising bond yields typically work against gold prices, as does a strengthening US dollar.
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