Gold Remains Under Pressure

Key Insights

• Gold continues to move lower as traders move funds into riskier assets. 
• Treasury yields pull back but stay close to yearly highs, which is bearish for gold. 
• A successful test of the support at $1950 will lead to the test of the next support level at $1935.

Gold Is Losing Ground

Gold is currently trying to settle below the support level at $1950 as demand for safe-haven assets declines.

Yesterday, S&P 500 gained 1.6%, highlighting the increasing demand for riskier assets, which was bearish for gold. Meanwhile, Treasury yields have started to pull back from new highs, but this move did not provide any support to gold markets.

The strong pullback in gold markets is disappointing for the bulls. While profit-taking has clearly played a role in recent weakness, the sudden decline in demand for safe-haven assets has also served as a material downside catalyst. In addition, the yield of 10-year Treasuries and 30-year Treasuries are already close to the 3.00% level, which puts some pressure on gold that pays no interest.

In this environment, VanEck Gold Miners ETF had no chance to continue its upside move and declined below the $40.00 level. Today, the pullback may continue in case gold settles below the $1950 level and moves closer to the support at $1935.

Technical Analysis

Gold is testing the support level at $1950. RSI is in the moderate territory, and there is plenty of room to gain additional downside momentum in case the right catalysts emerge.

In case gold settles below $1950, it will get to the test of the next support level, which is located at $1935. A move below this level will push gold towards the 50 EMA at $1925. If gold declines below the 50 EMA, it will head towards the support at $1915.

On the upside, gold needs to get back above the $1950 level to have a chance to gain upside momentum in the near term. The next resistance level for gold is located at $1965.

In case gold gets back above $1965, it will head towards the resistance at $1975. A move above this level will push gold towards the resistance at $2000.

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