September 14, 2022 18:34:24
Gold price trades negatively for the second straight day and breaks the $1,700 level. The precious metal remained pressured following the previous session’s rout. Despite, a weakness in the U.S dollar, the yellow metal failed to revive.
The market is ripe with an aggressive Federal Reserve’s next move. Investors maintain the distance from the non-yielding asset. U.S. Consumer Price Index (CPI) data, which increased 0.1% on monthly basis in August fuelled the market expectation of a bigger rate hike next week, even bigger than 75bps.
Further, the Producer Price Index (PPI) prints lower at 0.1% in August, slight relief from mounting inflation pressures. The data came in line with market expectations, following a 0.4% drop in July.
The benchmark 10-year Treasury yield trades with mild losses at 3.4%.
The gold is hovering near the long-term support and is on the edge of moving further down as can be seen on the daily chart.
The bulls must defend $1,680, the levels last seen in July. However, a renewed selling pressure might result in the breaking of the mentioned level. A fall below this level would be an alarming signal for the bulls as the price could travel to the territory last touched in 2020.
If the price fall, it could be a steep fall toward $1,500.
The price fell below the critical 200-day exponential moving average at $1,859 on May 10. Since then the asset has been in the downtrend with no immediate relief in sight.
To change the course of direction the bulls must close above $1,710, in that case, we could expect a move toward $1,730-35.