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Gold Price Likely to Fall Further as US Dollar Reigns

Gold Price Likely to Fall Further as US Dollar Reigns

2018-04-25 08:30:00
Nick Cawley, Strategist
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Gold Price, News and Analysis

- Gold buffeted by higher US Treasury yields.

- Gold nears support but lower prices likely

Check out our new Trading GuidesUpdated news and Analysis on Gold, Indices and Major Currency Pairs.

IG Client Sentiment data show 75.3% of traders are net-long EURUSD, 23% higher from last week. Download the free data to see how changes in retail positioning can help you gauge market sentiment.

Gold’s Path of Least Resistance is Still Lower

Gold’s attraction continues to fall in the face of rising US Treasury yields and nears a couple of interesting support levels, which if broken will leave the precious metal near the $1,300/oz level.

I

n the US Treasury space, the closely-watched 2-year currently yields 2.50% while the benchmark 10-year is at, or around, the headline prompting 3.0%, while the US dollar index currently trades at its highest level since January 12.

Yields have risen continually over the last year as expectations of higher US rates have hardened with analysts expecting another two or three 0.25% hikes this year – market expectations of three further hikes currently stand at 48%. Higher US interest rates draw money away from non-interest bearing gold.

Gold is currently trading just above the $1,320/oz., a level that has just held for the last two days. Below here, 38.2% Fibonacci retracement of the December – January rally at $1,316/oz. and the 200-day moving average at $1,308/oz. come into play. If this is broken the March 1 low of $1,302/oz. heaves into view just above the 50% retracement at $1,301.4/oz. The chart is also showing seven lower highs in a row. On the upside $1,335.6/oz. should hold sway for now.

DailyFX analyst Paul Robinson looked at gold in his latest webinar – Trading Outlook – Gold & USD Impact, Dax, S&P 500 and More.

Gold Daily Price Chart (September 12, 2017 – April 25, 2018)

Gold Price Likely to Fall Further as US Dollar Reigns

Would you like to know the Number One Mistake Traders Make? – Download our free guide to find out.

If you have questions or comments on this article, you can leave them in the section below, or you can contact the author via email at Nicholas.cawley@ig.com or via Twitter @nickcawley1.

--- Written by Nick Cawley, Analyst

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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