Gold Price drops sharply


Gold dropped sharply on Tuesday as the uptick in the treasury yields pushed up the dollar index. Should investors expect a stronger corrective rally in the yellow metal? What does the 5 September Gold Price Technical Forecast reveal?

5 September, OctaFX –  Currently, gold is trading at $1,194, having hit a 10-day low of $1,190. The metal’s biggest nemesis – the US dollar – picked up a bid yesterday, possibly due to a rise in the 10-year treasury yield to a three-week high of 2.90 percent.

The USD exchange rate, as represented by the dollar index, clocked a 14-day high of 95.74 yesterday, and was last seen trading at 95.29.

The pullback from the highs seen yesterday has likely helped the yellow metal recover from $1,190 to $1,194.

Focus on US wage growth

The data, due for release this Friday, is expected to show the average hourly earnings rose 2.8 percent year-on-year in August, following a 2.7 percent rise in July.

An above-forecast reading could trigger fears of economic overheating, something the Fed will likely counter by raising rates above the neutral territory and hence could lead to broad-based USD rally and drop in gold to $1,200.

On the other hand, a weaker-than-expected print could yield a stronger corrective rally in the yellow metal. 

Gold Price drops sharply

Technically speaking, $1,214.30 (Aug. 28 high) is the level to beat for the bulls.

Daily Chart

Resistance: $1,202 (previous day’s high), $1,204.59 (Aug. 3 low), $1,214.30 (recent high)

Support: $1,189 (previous day’s low), $1,183 (Aug. 24 low), $1,180.97 (61.8% Fib R of $1,160/$1,214.30)

Disclaimer

This article about Gold Price drops sharply was provided by OctaFX. It should substitute for professional marketing consulting. Forex margin trading involves substantial risks. Forex margin trading exposes participants to risks including, but not limited to, changes in political conditions, economic factors, and other factors. All of which may substantially affect the price or availability of one or more foreign currencies.

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