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Gold Price Fails to Hold $1,900 – Further Lows Ahead

Gold prices
Gold prices

The gold price failed to hold the $1,900 level and is now at risk of testing the key support levels again. The weakness in gold comes at a time when the U.S. dollar is falling so there is an underlying vulnerability in gold.

Gold rallied in July with the rest of the commodity space after investors questioned the debt and spending levels of the United States. This thesis has cooled with the fading chances of a second U.S. stimulus package and an economy that will probably create a more hawkish Federal Reserve.

Wednesday will see the release of the latest FOMC minutes and the markets will be looking to assess the potential for inflation and a possible path to a quicker tightening of policy by the Federal Reserve. U.S. bank Wells Fargo spoke of their outlook for gold last week saying: “The fundamental backdrop looks good. Interest rates remain low, money supplies excessive (quantitative easing), and we are doubtful that the U.S. dollar’s September rally has long legs. We view gold at these prices as a good buying opportunity and, as evidenced by our 2021 year-end targets, expect higher gold prices.” 

Many are bullish, but the gold price is at threat from a stronger U.S. economy. Once the election picture is clear the dollar may get a boost and this would be another headwind for gold. Recent reports have highlighted that demand has dropped in China and India, with the U.S. picking up the slack. Much of this demand has been driven by the bottom-picking, stimulus check investors and may not have strength into the future.

Gold Price Technical Outlook

Gold was able to bounce from the key support at $1863 and rallied above $1,900. The gold price has failed to hold that level and is now heading lower. The $1,863 level will be support again and while we are under the 50-day moving average the price is vulnerable. The Investing Cube team is currently available to assist all levels of traders with a Forex Trading Course or one-to-one coaching.  

Gold Price Daily Chart