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Gold Pulls Back As Dollar Rebounds After Yesterday’s Sell-Off

By:
Vladimir Zernov
Updated: Sep 29, 2022, 08:11 UTC

Gold markets need additional positive catalysts to move higher.

Gold

In this article:

Key Insights

  • Gold failed to settle above the resistance at $1660 and declined towards the $1640 level as U.S. dollar moved closer to recent highs. 
  • Higher Treasury yields served as an additional bearish catalyst for gold markets. 
  • A move below the support at $1640 will push gold towards the next support level at $1620.

Gold Retreats As Treasury Yields Rise

Gold moved back below the $1650 level as the U.S. dollar rebounded after yesterday’s sell-off.

The U.S. Dollar Index, which measures the strength of the U.S. dollar against a broad basket of currencies, found support near 112.50 and returned to the 113.50 level.

This move was bearish for gold and other precious metals. Silver moved back to $18.65. Platinum declined towards the $850 level, while palladium slipped to $2125.

Treasury yields rebounded after yesterday’s pullback, which was also bearish for gold markets. The yield of 10-year Treasuries moved from 3.70% to 3.84%. The strong rebound in Treasury yields indicates that bond traders remain nervous.

A combination of stronger dollar and higher yields may put significant pressure on gold markets, which remain in a strong downside trend. Traders will certainly stay focused on these key catalysts in the upcoming trading sessions.

If the U.S. dollar moves back to multi-year highs, gold and other precious metals will find themselves under significant pressure. Traders should note that there is no demand for gold as a safe-haven asset right now as all the safe-haven money goes into the U.S. dollar.

Gold Tries To Settle Below The Support At $1640

Gold

Gold failed to settle above the resistance at $1660 and moved closer to the support level at $1640. RSI is in the moderate territory, and there is plenty of room to gain downside momentum in case the right catalysts emerge. If gold manages to settle below this level, it will head towards the next support at $1620. A successful test of the support at the $1620 level will open the way to the test of the support at $1600.

On the upside, a move above $1660 will push gold towards the resistance at the 20 EMA at $1675. If gold settles above the 20 EMA, it will head towards the next resistance level, which is located at $1690. In case gold climbs above $1690, it will move towards the resistance at the 50 EMA at $1715.

For a look at all of today’s economic events, check out our economic calendar.

About the Author

Vladimir is an independent trader and analyst with over 10 years of experience in the financial markets. He is a specialist in stocks, futures, Forex, indices, and commodities areas using long-term positional trading and swing trading.

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