Gold Prices Drop to Eight-Week Low, Set to Reach $2560 USD: What Investors Need to Know
In a surprising turn of events, the price of gold is plummeting, with a troy ounce heading towards $2560 USD on Thursday. This marks an eight-week low for gold prices, driven by the strength of the US dollar and the latest inflation statistics released in the States.
While the inflation statistics were largely in line with expectations, investors are concerned about the rise in three-month inflation numbers on a year-on-year basis. This has led to speculation that the Federal Reserve may cut interest rates in December, with the likelihood of a rate cut now standing at around 80%.
Following last Friday’s sell-off, gold prices have already fallen by 4%. Market analysts believe that the upcoming presidency of Donald Trump could lead to the Fed halting its easing cycle due to potential inflation from protectionist policies. A strong US dollar is expected to continue to put pressure on gold prices, forcing the precious metal to retreat further.
Technical analysis of XAUUSD suggests that the market is forming a consolidation range and may continue to decline towards the level of 2511.65. However, a correction wave could see prices bounce back to 2608.00 before another decline to 2430.00. The MACD indicator supports this bearish scenario.
For short-term traders, a compact consolidation range is forming around the level of 2560.00, with potential for a correction to 2577.00 or a further decline to 2511.65. The Stochastic oscillator confirms the downward momentum in this scenario.
In conclusion, the current trend in gold prices is bearish, with multiple factors pointing towards further declines in the near future. Investors should carefully monitor market developments and consider adjusting their investment strategies accordingly to mitigate potential losses.