- Summary:
- Gold price broke important support and the market looks for further downside. Previous support acts as resistance now, as the dollar gains continue.
Gold price fell below $1,760 last week. The level acted as important support several times, but eventually, the bears prevailed. At present, the market is back in the area, meeting resistance, and a failure to get back above should put further pressure on the yellow metal.
I’ve been long saying here that the move lower in the price of gold may lead to a move higher in the dollar. The break lower seen last week came at the same time with a break higher in the dollar. The dollar gained across the FX board last week in a synchronized move that went against the risk-on theme that dominated financial markets recently.
The move higher in the dollar was triggered by the rise in the US 10y yield above 1.45%, bringing tightening financial conditions. Because of the COVID-19 pandemic, such tightening is unwanted, and thus central banks face a dilemma in the period ahead. The Fed looks trapped due to higher inflation, but other central banks may ease some more, further fueling the dollar’s rally.
Gold Price Technical Analysis
Gold looks weak here as the market retests previous support. Bears may want to remain on the short side with a stop at the previous lower high and a take profit level set at 1:2 or 1:3 risk-reward ratio.
Gold Price Forecast
