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