As the US dollar rose and bond yields rose on Tuesday, gold prices bounced back from this high. days. Precious metals fell as investors looked for new clues, which could explain whether the United States (US) is heading into recession. Market participants are also waiting for clues about how much interest rates the Federal Reserve (Federal Reserve) will cut this year.
The US dollar index (DXY), which tracks the greenback against six major currencies, rose to near 103.00 after recovering from a six-month low of nearly the 102.15. The 10-year yield on the US Treasury peaked at 3.86%. Historically, higher prices on productive assets reduce the opportunity cost of unproductive assets such as gold.
Meanwhile, the outlook for gold prices remains subdued due to several tailwinds. Rising tensions in the Middle East have increased gold’s image as a safe haven. Market players are bracing for the escalation of tensions between Iran and Israel, as Iran fired a large number of missiles at Israel on Saturday in retaliation for the assassination of the leader of Hamas. Ismail Haniyeh in an Israeli airstrike in Tehran.
Gold price remains on a positive trajectory on firm speculation that fears of a US economic slowdown will bolster bulk rate cuts by the Fed. Fears of the US facing a recession were prompted by soft labor demand, a higher Unemployment Rate, and contracting activities in the manufacturing sector.
The signal that confirms a technical recession is two consecutive declines in the nation’s Gross Domestic Product (GDP). The US economy performed strongly in the first half of this year. In the second quarter, the economy expanded by 2.8% on an annualized basis, double the growth rate recorded in the first quarter.
Technical Outlook : Gold Futures
Gold prices retreated from the day’s high of 69470 and made a low of 687083 before closing at 68880 compared to the previous day’s close of 69309.
Formation of three black crows on the chart indicates bearish momentum in the near future. Further, prices are trading below its SMA. Hence, a break below 68650 will extend the recent fall. And prices could test next support 67500-66880 very soon.
On the upside, massive resistance is seen at 71250 above it 71900.
Happy Trading!
Commodity Samachar
Learn and Trade with Ease
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