Beware of the US Senate Decision: A Correction or a Downward Signal for Gold?
Global gold prices declined during today's Asian session, in line with the strengthening of the US dollar and the surge in US government bond yields. This situation has prompted investors to sell off safe-haven assets like gold and shift to higher-yielding assets.
Based on international market data, the spot gold price fell to around US$4,107 per ounce, down 0.4%, after hitting a weekly high of US$4,148 per ounce.
Kitco Metals precious metals analyst Jim Wyckoff explained that the pressure on gold prices was caused by market expectations regarding US interest rate policy.
"Gold's weakness today is largely due to the strengthening dollar and risk-on sentiment in global markets. Investors are starting to believe the US economy is strong enough to survive without an interest rate cut in the near term," he said.
Technically, the gold price is showing a correction pattern after failing to break through resistance at US$4,160 per ounce.
The nearest support is in the US$4,020–4,000 range, and if this level is broken, the decline could potentially continue towards US$3,975.
The nearest resistance is now at US$4,120, while the main resistance at US$4,160 is a key psychological barrier.
Looking ahead, analysts expect gold price volatility to remain high into next week, especially ahead of the release of US consumer inflation (CPI) data and the US House of Representatives vote on the budget bill.
If inflation data shows that price pressures remain high and the dollar continues to strengthen, gold could potentially continue its decline towards US$3,950 per ounce. However, if US fiscal policy creates new uncertainty, this precious metal could rebound as a key hedge.
"Gold is currently at a balance point between economic concerns and monetary expectations. Its next movement depends heavily on the direction of the Fed's policy and the outcome of budget deliberations in Congress," Erlam concluded.
Source: Newsmaker.id
