Gold and other precious metals have been under pressure against a rising yield backdrop, while stubbornly high inflation remains a focal point.
Gold Futures (COMEX: GC) have been trending lower over the month despite a slight easing in US core inflation data, but the real risk of tightening remains. Monetary tightening remains which will bring the Fed’s meeting minutes scheduled for Wednesday back into focus. The stronger Dollar and rising US Treasury Yields have put a dent in Gold’s step as the price of the precious metal is approaching a significant support level.
Looking at the daily chart of Gold, we can see that the price action has been trending lower over August. The price action is now at a major support level of around $1943/ ounce (red line), which will be watched closely this week. If the support structure does not hold, we could expect lower support levels around $1930 and $1910/ ounce to be in focus.
If the significant support level holds, the possibility exists for the price to trend higher to the overhead resistance around $1960 and $1980/ ounce.
Economic data remains topical this week, with the FOMC Meeting Minutes scheduled for Wednesday, which could bring back some market volatility. Significant levels of support to watch are the $1943 and $1910/ ounce, while the overhead resistance at $1960 and $1980 comes into focus if the price action trends higher from current levels.
Source: Reuters, Koyfin, TradingView.
Piece written by Barry Dumas, Head of Client Education
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