Breaking News
Investing Pro 0
NEW! Get Actionable Insights with InvestingPro+ Try 7 Days Free

Gold Looks Heavy As It Probes $1,700 Support 

By Fawad RazaqzadaCommoditiesSep 07, 2022 11:46
ng.investing.com/analysis/gold-looks-heavy-as-it-probes-1700-support-128359
Gold Looks Heavy As It Probes $1,700 Support 
By Fawad Razaqzada   |  Sep 07, 2022 11:46
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
 
EUR/USD
+0.48%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
GBP/USD
+0.33%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
USD/JPY
+0.07%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
AUD/USD
+0.71%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
XAU/USD
+0.18%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
DX
-0.27%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
  • Gold continues to be undermined by rising dollar and yields
  • Rising interest rate expectations reduce appeal of zero-yielding assets
  • Metal is testing key support, but it could break it this time

Gold gave up its earlier gains yesterday to turn lower, leading to some follow-up selling first thing in the Asian session. The metal then bounced back more than $10 to go above $1,700 by the European open.

It was trading in the positive at the time of writing. However, I can’t help but feel more pain is on the way for precious metals investors, with gold having struggled all year to find its feet. It looks like a drop below last year’s low is almost inevitable.

Gold has proved to be a poor hedge against inflation and keeps getting hammered for two main reasons: the strengthening U.S. Dollar and rising bond yields. The greenback has been supported because of the Fed’s aggressive approach to tame inflation. The U.S. central bank has promised to deliver more aggressive rate hikes even at the cost of growth. As a result, we have seen the USD/JPY surge to repeated new multi-decade highs, while the EUR/USD has slumped below parity and the likes of the Aussie and cable have similarly struggled.

Investors are becoming more and more convinced that the Fed is going to raise rates by another 75 basis points this month and proceed with further aggressive hikes until inflation comes back under control.

Gold Daily
Gold Daily

Following Tuesday’s reversal, gold printed an inverted hammer candle on its daily chart as it found stiff resistance from the short-term bear trend and prior support area around $1,727. The metal is now deciding what to do at $1,700, where it has repeatedly bounced in the past. Given the progressively weak bounces off $1,700 support, and the outlined macro factors, the precious metal could very well break $1,700 decisively this time around.

Indeed, there are a few untapped liquidity pools that the bears are targeting. The first is below the July low at $1,680ish, while last year’s low is not very far either at $1,676. It is likely that a cluster of stop orders from trapped long traders may be resting below these levels. Thus, watch out for a potential run on these stops and thus a sharp move lower in the coming days.

Disclaimer: The author currently does not own any of the instruments mentioned in this article.

Gold Looks Heavy As It Probes $1,700 Support 
 

Related Articles

Gold Looks Heavy As It Probes $1,700 Support 

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email