Gold News: Strong Dollar and Oil Spike Pressure Gold Price Outlook

Gold Hugging the Pivot as Dollar and Oil Apply Pressure

Spot Gold (XAUUSD) is sitting at $4737.53 Thursday and the market can’t make up its mind. Three sessions hugging the same level tells you traders are waiting for something to force the decision. Keep reading for what the charts are saying and what breaks the stalemate.

Technical Outlook

Spot Gold (XAUUSD) is under pressure for a third session on Thursday, essentially hugging the $4744.34 pivot, the very line that controls its near-term direction. Where it goes from here depends on your perspective.

Short-term traders may view the current setup as bearish because the market is currently trading on the weak side of the pivot. This pressure is likely coming from bearish traders defending against an upside breakout over the 50-day moving average at $4875.52.

With the short-term outlook defined and potential exits identified, the focus now shifts to the longer-term viewpoint. It’s saying that a sustained move under $4744.34 opens the door to further downside action with the minor bottom at $4644.46. Not only is it controlling the minor trend, but it’s also a potential trigger point for an acceleration to the downside.

If prices do accelerate lower, the target for the shorts will be the near-term retracement zone at $4495.33 to $4401.84. This is the value zone that if tested is likely to attract the larger buyers. This is because the market is in an uptrend as defined by the 200-day moving average at $4239.25. As long as this long-term indicator holds as support the bias will remain to the upside, meaning that the market will remain in buy the dip territory.

The trade near $4744.34 is telling me the market is asking us to decide, do we want to buy strength on a move over this level, or do we want to wait for a pullback into the value zone at $4495.33 to $4401.84, where we have better control over the risk?

Dollar and Oil Are Running the Show

The dollar ticked higher Thursday and gold felt it immediately. Foreign buyers get priced out when the dollar firms and the bid thins out fast at these levels. The 10-Year U.S. Treasury yield pushing to a one-week high is adding to it. When yields climb, money moves toward assets that actually pay something and gold sits there collecting nothing. That combination is enough to keep buyers from getting aggressive.

Oil Above $100 Is the Real Problem

 

Spot Brent Crude Oil pushing back above $100 is what I’m watching most closely right now. Iran still has a grip on the Strait of Hormuz and talks are going nowhere. Every barrel that can’t move through that chokepoint freely puts more pressure on energy prices and more pressure on energy prices means inflation doesn’t cool off the way the Fed needs it to.

Here’s where it gets complicated for gold. Higher oil feeds inflation and gold is supposed to benefit from inflation. The problem is the Fed doesn’t cut rates into an inflation spike. They hold or they hike. Rates staying elevated keeps the dollar firm and keeps capital flowing toward yield. That’s the ceiling on Spot Gold (XAUUSD) right now and oil above $100 is the reason it stays there.

The Way I See It

The Fed isn’t cutting for at least six months and energy prices are the reason why. I’m not looking at this as a trend reversal. Gold is consolidating and the 200-day moving average at $4239.25 tells you the longer term structure is still intact. The value zone at $4495.33 to $4401.84 is where I’d want to see buyers show up if this pulls back further. That’s the level that tells you whether this is a dip or something more serious.

More Information in our Economic Calendar.