GOLD in the Critical Zone

Gold prices are back under pressure since the latest US CPI report led to a massive sell-off in the precious metal as the US dollar index surged again and non-yielding asset classes fell. In Tuesday’s (20/09) trading, Gold was seen back in the critical zone with surging global bond yields being the main reason.

The yellow metal is under pressure, as expectations are now that interest rates may need to be raised higher than expected. If we continue to see the US dollar index move to new highs in recent times, we are likely to see Gold slip further and move beyond the yearly low price, which is a technical danger zone.

A break back to the new low could lead to a technical meltdown. In short, the technical battle is now in favour of the sellers. Gold fund liquidation is another bearish factor as long positions in gold ETFs fell to an 8-month low on Monday. The action from Sweden’s Riksbank to raise interest rates by a larger-than-expected 100 bp also weakened the metal prices.


From a technical point of view, a break of the 2021 low, would become a turning point that traders will take into account. And a move back to the downside to surpass the weekly low of 1653.98 could trigger a major drop for the FE100% projection at 1595.33 or further for the 50.0%FR retracement level around 1567.00.

Meanwhile, a move above 1680.25 will mix up the near-term outlook, but as long as it trades below 1676.77 low the bearish outlook will remain.

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Ady Phangestu

Market Analyst – HF Educational Office – Indonesia


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