Is gold heading to $1800?
Gold and especially silver plunged on the back of more hawkish comments from the Fed Chair Jerome Powell.
At the time of writing, both metals were near the day's lows. While there is always the possibility of a short-term bounce from oversold levels, gold could be heading to a fresh multi-week low. Silver had already broken its prior low and was trading in the low-20.00s.
So, gold could also break last week’s low around $1805 and test the next round level of $1800 before deciding on its next move. It may even reach $1800 before the day is over. Unlike equity markets, precious metals don’t pay any dividends. The don’t pay any interest either, unlike bonds. With the dollar rebounding and the yield on the 2-year US government bonds breaking out to a new high near 5%, gold would do very well to hold support around current levels.
Regardless of what happens in the next few hours, a daily close below Friday’s range at $1835 would keep the short-term bias decidedly bearish.
Even if gold were to find unexpected support in the next few days, it still faces a few other big levels ahead – for example at $1900. So, the bulls have a lot of wood to chop before we turn positive on the technical outlook of the metal again. For now, the path of least resistance is still to the downside.
-- Written by Fawad Razaqzada, Market Analyst with FOREX.com
Follow Fawad on Twitter @Trader_F_R
At the time of writing, both metals were near the day's lows. While there is always the possibility of a short-term bounce from oversold levels, gold could be heading to a fresh multi-week low. Silver had already broken its prior low and was trading in the low-20.00s.
So, gold could also break last week’s low around $1805 and test the next round level of $1800 before deciding on its next move. It may even reach $1800 before the day is over. Unlike equity markets, precious metals don’t pay any dividends. The don’t pay any interest either, unlike bonds. With the dollar rebounding and the yield on the 2-year US government bonds breaking out to a new high near 5%, gold would do very well to hold support around current levels.
Regardless of what happens in the next few hours, a daily close below Friday’s range at $1835 would keep the short-term bias decidedly bearish.
Even if gold were to find unexpected support in the next few days, it still faces a few other big levels ahead – for example at $1900. So, the bulls have a lot of wood to chop before we turn positive on the technical outlook of the metal again. For now, the path of least resistance is still to the downside.
-- Written by Fawad Razaqzada, Market Analyst with FOREX.com
Follow Fawad on Twitter @Trader_F_R
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