Gold Under Pressure

Gold prices have turned sharply lower over the last week against the backdrop of a rising US Dollar. US yields have hit their highest levels since 2007/2008 on the back of the Fed’s recent signals that it expects one further hike this year with rates then expected to stay at higher levels for longer in line with the resilience seen in the US economy. Better than expected data and a recent uptick in inflation have forced a shift in the Fed’s outlook with traders now scrambling to adjust their positions accordingly.

USD Safe-Haven Flows

Alongside the shift in Fed outlook, the Dollar is also being driven higher by safe-haven inflow linked to fears over a potential US government shutdown next week. With the greenback attracting capital as a store of safety, gold prices look likely to fall lower near-term. Looking ahead this week we have plenty of US data to keep an eye on, as well as comments from Fed chairman Powell, starting with durable goods later today. If these readings show further strength, we can expect USD to continue higher near-term, keeping gold prices pressured lower.

Technical Views

Gold

Gold prices recently failed into the retest of the September highs around the 1946 level. Price has since broken below the 1905.46 level and is now threatening to move lower still, in line with bearish momentum studies readings with 1871.04 the next downside level to watch.