The price of gold decreases as the rise in US bond yields and the strengthening of the US Dollar create a difficult situation for the valuable metal.

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• Gold prices tumble as high US bond yields, and a strengthening US Dollar create a challenging environment for the precious metal.

The pair currently trades last at 1900.00.

The previous day high was 1927.27 while the previous day low was 1915.2. The daily 38.2% Fib levels comes at 1919.81, expected to provide resistance. Similarly, the daily 61.8% fib level is at 1922.66, expected to provide resistance.

Gold price tumbled towards $1900 on Tuesday, weighed by high US bond yields underpinning the Greenback (USD) as traders brace for the Fed’s mantra that would keep rates “higher for longer.” Therefore, XAU/USD is falling after hitting a daily high of $1916.89 and is trading at $1901.16, down 0.76%.

Wall Street is trading in red territory, while US bond yields advance. One of the main drivers of Gold weakness is the US 10-year TIPS (Treasury Inflation-Protected Securities) yield, a proxy for real yields, which rose to new fourteen-year highs at 2.236%, a level last seen in July 2009. At the same time, the US Dollar Index, which tracks the performance of six currencies against the US Dollar, climbs to 106.17, up 0.21%, after hitting a new year-to-date (YTD) high of 106.20.

Last week’s Fed’s decision to hold rates unchanged but upward revising interest rates in the United States (US) in 2024 from 4.6% to 5.1% caught off guard traders, expecting rate cuts by the Fed at around July of next year. Hence, as they scramble through the doors, they are beginning to price in a scenario of higher rates, as could be seen by the financial markets’ reaction.

Additionally, although Fed officials stressed that patience is required, the majority is ready to raise rates again, as inflation, per the latest report, increased to 3.7%, as shown by the Consumer Price Index (CPI). It should be said the recent rally in oil prices, could pave the way for another inflation spiral, as West Texas Intermediate (WTI), the US crude oil benchmark, is trading near the $90,00 per barrel mark.

Data-wise, the Conference Board (CB) reported that consumer Confidence reached a four-month low, as the index declined to 103 from 108.7 in August, and below estimates of 105.5. The decline is attributed to a deteriorating economic outlook for the overall economy.

Earlier, housing data was revealed, as August’s Building Permits in the US increased from July’s 1.443 million to 1.541 million, indicating continued growth in construction. However, the housing market shows signs of weakness as New Home Sales plummeted by -8.7% compared to the 8% increase in July. The decline is mainly due to higher mortgage rates, as the Federal Reserve embarked on an aggressive tightening cycle that witnessed interest rates hit the 5.25%-5.505 area.

Ahead of the week, the US economic docket would feature the release of Durable Goods Orders, Initial Jobless Claims, GDP, the Fed’s inflation gauge, and the core PCE alongside Fed speakers.

The XAU/USD daily chart portrays the yellow metal is set to extend its losses though pending to pierce below the $1900 figure, which could open the door to test August 21, the last cycle low at $1884.89, before extending its losses towards the next support seen in March 8 daily low of $1809.48. Conversely, if XAU/USD stands above $1900, that could open the door to reclaiming September’s 20 high at $1947.39.

Technical Levels: Supports and Resistances

XAUUSD currently trading at 1900.39 at the time of writing. Pair opened at 1915.72 and is trading with a change of -0.8 % .

The pair remains strongly bearish on the daily time frame. It trades below the 20 SMA @ 1925.75, 50 SMA 1929.25, 100 SMA @ 1941.21 and 200 SMA @ 1926.19.

The previous day high was 1927.27 while the previous day low was 1915.2. The daily 38.2% Fib levels comes at 1919.81, expected to provide resistance. Similarly, the daily 61.8% fib level is at 1922.66, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 1911.52, 1907.33, 1899.45
• Pivot resistance is noted at 1923.59, 1931.47, 1935.66

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