Gold Retreats After An Unsuccessful Attempt To Settle Above $1950

Key Insights

• Treasury yields move closer to recent highs, which is bearish for gold. 
• U.S. dollar is also moving higher, adding to pressure on precious metals. 
• A move below $1935 will push gold towards the support level at $1915.

Gold Pulls Back Ahead Of The Weekend

Gold made an attempt to settle above the resistance at $1950 but lost momentum and pulled back towards the support level at $1935 as Treasury yields rebounded closer to recent highs.

The dynamics of U.S. government bond markets are the main catalyst for gold markets in absence of geopolitical news. The yield of 2-year Treasuries has recently moved back above the 2.40% level and is heading towards the recent highs at 2.45%. A move above 2.45% will push the yield of 2-year Treasuries towards the 2.50% level, which will be bearish for gold and other precious metals.

The U.S. dollar has also received some support from rising yields and moved higher against a broad basket of currencies, which was bearish for gold.

Yesterday, VanEck Gold Miners ETF made an attempt to settle above the $39 level but lost momentum and declined below $38.50. As we have discussed on Thursday, gold had to stay close to the $1950 level for GDX to have a chance to get above $39. In case gold settles back in the $1915 – $1935 range, GDX may continue its pullback during today’s trading session.

Technical Analysis

Gold is testing the support level at $1935. In case this test is successful, gold will move towards the next support level, which is located at $1915.

A successful test of the support at $1915 will lead to the test of the next support at $1905. If gold settles below this level, it will move towards the support at $1880.

On the upside, a move above $1935 will push gold back to the resistance at $1950. If gold gets above this level, it will move towards the next resistance at $1965. A successful test of the resistance at $1965 will open the way to the test of the resistance at $1975.

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