As expected, Gold plunged over 2.50% – What next?

As expected on 13 September 2023, after breaching support of the Symmetrical triangle pattern. Gold prices plunged drastically and dropped more than 2.50%.

A concern over rising U.S. interest rates resulted in a significant fall in bullion prices. Since 21 September 2023, Prices continued to trade under pressure, recently touching their sixth-month low. The greenback, which jumped to a 10-month high and 10-year yields reached a 16-year peak, was the main culprit behind the recent fall.

The US central bank last week warned that inflation was likely to attract at least one more interest rate hike by the end of this year.  Moreover, the US economic resilience should allow the Fed to stick to its hawkish stance.

Sentiment worsened as oil prices jumped to 2023 highs on Wednesday, which markets feared could factor into stickier inflation and keep interest rates higher for longer. Fears of a U.S. government shutdown also kept investors largely biased towards safe-haven assets.

Now, US GDP, pending home sales data is set to be released later today. While, the US Core PCE Price Index on Friday, which will provide fresh cues about the Fed’s future rate-hike path and provide a fresh directional impetus to the non-yielding yellow metal.

Technical Outlook

Gold prices witnessed their biggest intraday fall since 16 May 2023, yesterday. Prices touched their 6-month low 57450 in earlier trade and traded at 57505, down 0.29%.

As per the outlook given on 13 September 2023, they were proven accurate. After breaching the crucial support of 58480, Gold prices witnessed more than 2.5% fall.  

A strong breakdown of the Symmetrical triangle pattern on the chart indicates a bearish momentum in the near future. And prices are expected to go down further. MCX OCT Future which traded at 57510 is going to expire on 5 October 2023, hence looking to the December future (58174) is expected to drop towards 57800-57550 very soon.

on the upside, massive resistance is seen at 58980 and a break above only short cover could occur. And prices may test immediate resistance 59250-59650.