Gold Price Analysis – Gold Continues to Drop When Rates Jump

Gold Technical Analysis

The gold market has drifted a little bit lower during the trading session on Wednesday in early trading as we continued to see a lot of correlation between gold pricing and the 10-year yield in the United States. Really, it’s interest rates in general, but as we break above the 4.30% level, it looks as if we start to see the US dollar pick up in general and that of course has a negative influence on gold.

As things stand right now, I think we’re probably looking at the 4,600-level underneath as a potential floor in the market. It has certainly functioned as such over the last couple of weeks and has previously been both support and resistance. So that’s my default here. I’m looking at this as a potential buy on the dip scenario, but we need to see some type of bounce.

Interest Rate Correlations and Key Technical Levels

To the upside, we have the 50-day EMA, and if we can break above there, then the 4,925 level could be targeted, followed by 5,000. In general, this is a market that I think is in a period of consolidation, and that’s fine, it makes a certain amount of sense, as we recently have seen a lot of bullish pressure in this market.

We’ve had a lot of volatility and, of course, a lot of nonsense coming out of the Middle East between different headlines, throwing markets around. As long as that’s the case, I think your default is somewhat neutral, but watch that 4,600 level, that will be crucial to determine whether we continue this overall sideways move, or do something drastic.

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