Gold Prices Tumble Amid Renewed US Dollar Strength After Positive European Session
In today’s US session, gold prices took a hit after a strong rally in the European session. The precious metal surged from 2628 to 2652 before the US open, only to face renewed US Dollar strength later in the day. This shift in market sentiment comes as concerns around China’s economic slowdown persist.
China, a major consumer of metals, has been grappling with a slowdown for over two years. Despite efforts by the People’s Bank of China to support the economy, concerns around the property sector crisis and overall demand for metals remain. The lack of new stimulus measures from China’s National Development and Reform Commission has added to the uncertainty in the market.
The recent pullback in gold prices can also be attributed to the repricing of rate cuts and the lack of significant response to the Iranian missile attack. However, the situation in the Middle East remains volatile, with potential for further escalation, which could reignite the safe haven appeal of gold.
On a positive note, the latest World Gold Council report shows that net ETF inflows increased in September, indicating strong demand for gold. This trend, coupled with central banks’ interest in gold, suggests that the current pullback in gold prices may be temporary.
Looking ahead, market participants are awaiting the release of FOMC minutes and US CPI data, which could provide further insights into the economic outlook. From a technical analysis standpoint, gold is facing key support levels at 2600 and 2574, while resistance levels are at 2624 and 2630.
In conclusion, while the recent pullback in gold prices may raise concerns, the overall demand for gold remains strong. The geopolitical risks and economic uncertainties continue to support gold prices, making it an attractive asset for investors in the medium to longer term.