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Gold came under renewed pressure in the first half of Monday’s session, alongside weakness across the major FX pairs, especially the EUR/USD. The gold weakness follows a relatively sharp two-day rally at the end of last week, which had raised hopes that the metal may finally have found a floor.
Markets went from risk off to risk on yesterday afternoon and we have since kicked on with some follow-up buying of stocks, gold and silver, while the dollar has also shown signs of weakness. Risk appetite turned positive after bond yields and oil prices both retreated yesterday.
As the trading week continues to unfold, gold is once again facing difficulties in regaining momentum in the short term. This can be seen in the performance of the last three trading sessions, where the metal has declined by approximately 0.9%, resuming a bearish dynamic that has once again become evident in recent market activity.
Gold remains stuck between a rock and a hard place, with the directional bias remains tilted to the downside. While dovish Federal Reserve repricing and lower oil prices in the last couple of days has provided some support, the metal is still undermined by the elevated yields and the risks that oil prices may rebound and create fresh volatility for financial markets.
With inflation still the Federal Reserve’s main concern and elevated oil prices keeping pressure on bond yields, the near-term gold outlook remains tilted to the downside, even if the longer term view remains constructive.
As the trading week comes to an end, weakness around gold price action remains evident in the short term. This can be seen in the performance of the past two sessions, where the metal has declined by approximately 0.3%. Although the move has not been particularly aggressive, it highlights that buying pressure continues to struggle to regain control of the market.
The start of the trading week has not been particularly favorable for gold. This can be seen in recent XAU/USD price action, with the metal falling nearly 4.00% over the last two trading sessions and bringing renewed attention to a bearish bias within the market.
Gold and silver prices took a plunge today, with the former down 3% and the latter falling some 5% by mid European session, before bouncing off their lows. The losses come after the metals remained largely supported until last week, despite the big dollar rally and surging bond yields as we have seen in recent weeks. But it simply got too much, and the metals succumbed to pressure today.
As we headed towards the latter stages of Q3 and into Q4, the Fed had just hiked rates in a hawkish FOMC meeting, while the likes of the ECB and BoJ had also tightened their respective policies. Oil prices remained elevated amid the prolonged US-Iran conflict. Meanwhile, bond yields were breaking out, and the dollar was higher across the board. Yet, remarkably, gold was still holding in the positive territory for the third quarter, even if it had weakened somewhat in September.
Gold prices have been falling in the last few days after last week’s post-FOMC pop faded amid rising interest rate expectations, higher oil prices and a strengthening US dollar. As before, I wasn’t convinced gold would thrive in the current macro backdrop.
The trading week continues, and for now gold remains under notable pressure in the short term. This can be seen in the performance of XAU/USD over the last three trading sessions, where the metal has declined by more than 2.00%, bringing a bearish bias back into focus after it had lost momentum in recent weeks.
Gold has started the new week on the back foot after ending a three-week losing streak with gains over the final two sessions of last week. The rebound came as the dollar’s rally stalled and oil prices retreated, while a broader improvement in risk appetite lifted major equity indices and extended Bitcoin’s recovery to $85,000. For now, consolidation is the name of the game, but if the US dollar, bond yields or oil prices start moving higher again then this will negatively impact the price of gold.
Gold prices rallied sharply today, reversing yesterday’s losses and some. It is quite common for markets to reverse the FOMC-related moves within 24 hours and yet again this has proven to be the case. Now that we are back to pre-FOMC levels, the key question is where do we go from here? While gold may have formed a technical bullish signal today, the fundamental backdrop remains tied pretty much to the same factors that have been weighing on prices lately...
