Gold fell again on Tuesday toward the 4,325 support zone, nearly 8% below its August 25 peak, as US Treasury yields rallied and traders raised the odds of a September Fed rate hike. A break below 4,325 could open the way toward 4,200, while a rebound above 4,500 would point back to the 4,700 area.
Gold prices fell again on Tuesday, nearing the 4,325 zone, marked by the low of August 19. The metal is nearly 8% down from its August 25 peak, reflecting a rally in US Treasury yields and elevated expectations of a September rate hike by the Fed.
Warsh comments lift hike odds
At his first Jackson Hole speech on Friday, Fed Chair Warsh said underlying inflation trends, according to Investing.com: "have not meaningfully improved", adding that he and his colleagues remain ready to act in accordance with their price stability mandate. That took the probability of a September rate hike above 50%. Renewed military hostilities between the US and Iran pushed it even higher, to 65%.
Investors now shift their attention to the ISM PMIs for August and the nonfarm payrolls report for the month, scheduled for Friday, where upbeat data could solidify the case for a September Fed hike and push gold even lower.
Bears eye 4,200 and 4,115
A decisive break below the 4,325 zone and the 200-day exponential moving average could invite more bears into the game, triggering declines toward the 4,200 zone, marked by the inside swing high of July 6. If sellers don't stop there, the slide may extend toward the 4,115 territory.
The RSI is already below 50 and points down, suggesting momentum may have already turned negative. However, the MACD, although below its trigger line, remains within positive territory, suggesting the outlook has not darkened that much yet.
Upside levels to watch
A strong rebound above the 4,500 zone could dismiss the bearish case, at least temporarily, and encourage advances toward the 4,580 zone. It could then open the way toward the high of August 25, at around 4,700.
Source: Investing.com
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