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Gold Prices Down with Stocks as the US Dollar Gains on Haven Demand

Gold Prices Down with Stocks as the US Dollar Gains on Haven Demand

Ilya Spivak, Head Strategist, APAC

GOLD PRICE OUTLOOK:

  • Gold prices down with stocks after US consumer confidence data disappoints
  • Risk-off flows face few barriers from barebones economic, earnings calendars
  • Technical positioning hints gold upswing from late June might have topped
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Gold prices fell alongside stocks on Friday as a disappointing US consumer confidence survey from the University of Michigan sent markets scrambling. The headline sentiment gauge unexpectedly dropped to a five-month low.

As noted ahead of the release, rising prices emerged as a key concern. The survey’s tracking of one-year inflation expectations put the projected rate at 4.8 percent, the highest in 13 years. Shares fell and haven demand buoyed the US Dollar, applying pressure on perennially anti-fiat bullion.

The downbeat tone has extended through the weekend, souring investors’ mood at the weekly Asia-Pacific trading open. Regional shares are down over 1 percent. Futures tracking bellwether European and US equity indexes are pointing meaningfully lower too, signaling that more of the same may be ahead.

A barebones offering on the data docket offers few stumbling blocks to derail momentum. Second-quarter results from IBM headline a similarly bare-bones earnings calendar. If that leaves the door open for risk-off flows to continue driving USD upward, gold prices are vulnerable to deeper losses.

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GOLD TECHNICAL ANALYSIS – BEARISH REVERSAL BREWING AHEAD?

The upswing traced out from late June lows may be topping. Prices produced a bearish Evening Star candlestick pattern, hinting a downturn may be ahead. Confirmation calls for a daily close back below the 1797.63-1808.40 inflection zone. That could set the stage for a drop to the 1755.50-64.73 area.

A dense resistance block looms just above last week’s high, running all the way up to 1870.75. If buyers reassert the upper hand, a daily close above this barrier may set the stage for another push through the 1900/oz figure to challenge June’s high at 1916.53.

Gold price chart - daily

Gold price chart created using TradingView

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--- Written by Ilya Spivak, Head Strategist, APAC for DailyFX

To contact Ilya, use the comments section below or @IlyaSpivak on Twitter

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