Gold Loses Momentum, Rate Hike Expectations Strengthen
Gold prices came under pressure again on Monday, falling around 4% as the market increasingly aggressively priced in the possibility of faster interest rate hikes from major central banks. The pressure stemmed from surging interest rate expectations, which boosted the dollar and increased yields, increasing the opportunity cost of holding gold—a non-yielding asset. This movement left gold virtually flat year-to-date, reversing its strong performance after hitting an intraday peak in late January.
Psychologically, the market believes gold's previous rally is losing fuel as the inflation narrative shifts to a tighter policy narrative. After rising nearly 30% from the start of the year to the January peak, the sharp correction indicates investors are choosing to wait for volatility to stabilize before adding to their positions. As long as expectations of monetary tightening continue to rise and yields remain high, gold's recovery potential is likely to be limited, and its movements will remain sensitive to changes in interest rate pricing.
The gold price at the time of this analysis's release was at $4,273.
- Buy if the price moves below $4,268.
- Sell if the price moves below $4,278.
Resistance 2: $4,366.
Resistance 1: $4,320.
Support 1: $4,217.
Support 2: $4,160.
Note:
This article is analytical in nature and is not a definitive reference. Please consider the impact of fundamental and technical developments on your trading before making any investment decisions.
Source: Newsmaker.id
