Gold News: Market Faces Further Losses with No Catalyst to Spark Rally

Gold Hits a 17-Week Low and the Trend Has Turned

Spot gold (XAUUSD) began the new week under pressure, dropping $399.35 on Monday before hitting a 17-week low at $4099.12 early in the session. This was on top of last week’s $523.12 loss. The selling pressure was triggered by a breakdown under a long-term trend line that had been in place since the week-ending October 31. Also contributing to the breakdown was the failure at a 50% level at $4744.34. Early Monday, sellers took out a 61.8% level at $4427.82, putting a key support cluster on the radar.

A Value Zone Is Coming Into View but It Hasn’t Been Tested Yet

The cluster is formed by the 52-week moving average at $3932.42, a long-term trend line at $3919.32 and a main bottom from the week-ending October 31 at $3886.46. This area could be a value zone, but we won’t know for sure until it is tested and there is a technical bounce. The momentum has definitely shifted to the downside and to those using the trend line as an indicator, the trend has also turned down. A bearish pall has hit the market and the only way to recapture the uptrend is to overtake the same levels that helped cause the sell-off.

Treasury Yields Are the Real Enemy of Gold Right Now

The biggest factor weighing on gold right now is Treasury yields. When the 10-year yield surges, big money has a choice. They can sit in gold which pays nothing, or they can lock in a guaranteed return from Treasuries. That’s not a hard decision. They sell the gold and fund the trade. That’s what’s happening right now.

Yields are rising because inflation keeps running hot and the bond market has adjusted to that reality. Capital is moving out of gold and into interest bearing assets. As long as yields stay elevated, rallies in gold are going to get sold. Traders aren’t building long positions here. They’re using the bounces thttps://www.fxempire.com/tools/economic-calendaro get out.

Rate Cut Hopes Are Fading and Gold Is Paying the Price

The Fed rate cut timeline keeps getting pushed further out and gold is feeling it. The economic data isn’t giving the Fed a reason to move and traders know it. Higher for longer is back on the table and that’s not a friendly environment for gold. If the next round of data comes in hot or Powell stays hawkish, the sellers are going to keep showing up on every bounce.

No Fresh Catalyst Means the Sellers Stay in Charge

Gold ran hard for a long time and now traders are cashing out. That’s not complicated. When momentum stalls at elevated levels the profit takers show up. Right now there’s no fresh reason to buy. No new geopolitical shock, no pivot from the Fed, nothing that would bring the safe-haven crowd back in size. Until something changes the sellers have the upper hand on every rally.

More Information in our Economic Calendar.