As of early Wednesday, the price of gold remains below $2,400, continuing its downward trend for the fifth consecutive day. The US Dollar is gaining strength against the Japanese Yen, leading to an increase in US Treasury bond yields.
Despite expectations of a dovish stance from the Federal Reserve, the US Dollar is seeing renewed buying interest due to positive movements in the USD/JPY pair and rising bond yields. Market stability has reduced the demand for safe-haven assets like gold, putting pressure on the precious metal’s price.
Japanese equity markets are seeing gains, with a 4% rally in indices following dovish comments from the Bank of Japan. This has led to a decline in the Yen, boosting the USD/JPY pair and further strengthening the US Dollar.
Investors are now anticipating a significant interest rate cut by the Federal Reserve, with a 70% chance of a 50 bps cut in September. This, along with geopolitical tensions and market sentiment, will continue to impact the price of gold in the coming days.
Technical Analysis:
On the daily chart, gold has broken below the key 21-day Simple Moving Average (SMA) support, signaling a bearish trend. The Relative Strength Index (RSI) is also in bearish territory, indicating further downside potential.
If the current trend continues, gold is likely to break below the symmetrical triangle formation support at $2,378. The next support levels to watch are at $2,368 and $2,350. On the upside, a rebound above $2,400 could lead to a retest of resistance at $2,415 and $2,425.
Analysis:
Gold prices are under pressure due to the strengthening US Dollar and rising bond yields. Market stability and expectations of a Fed rate cut are driving investor sentiment. Geopolitical tensions and market sentiment will continue to influence gold prices in the near term.