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Gold Under Pressure
Gold prices have come under heavy selling pressure this week with gold futures revering sharply lower from their initial Monday highs. The week started on a good footing for gold bulls with safe-haven demand driving the asset higher. However, a shift in the market’s central bank outlook across the week has seen longs being covered, driving gold down to fresh lows for the year.
UK CPI Rises, Fed Pushes Back on Rates
A surprise uptick in UK inflation this week has seen the market quickly pairing back its BOE rate cut expectations in coming months. The bank itself has warned that further tightening might be needed which traders now sense is a real risk. Fed’s Waller was heard pushing back against rate cut expectations in the US this week, noting that the Fed has ample time to ease out of restrictive territory in rates and is in no rush to do so, effectively dampening calls for Q1 rate cuts. Yesterday’s stronger-than-forecast US retail sales data have added to this notion.
ECB Pushes Back Also
Finally, ECB’s Lagarde warned yesterday that the bank’s battle against inflation is not yet over. Lagarde warned that aggressive rate cut speculation was making the bank’s job harder while ECB’s Knot signalled that the current market dynamic made near-term ECB rate cuts less likely.
Bearish Risks for Gold
Against this backdrop, gold prices have seen continued selling. With traders now pushing central bank rate-cut bets back towards the summer, gold looks vulnerable to further downside near-term, particularly while the current USD rally continues.
Technical Views
Gold
The turn lower in gold futures this week has seen the market breaking down below the bull trend line from 2023 lows and below the prior 2024 lows around the 2040 mark. Focus is now on a test of the 1973.51 level next with bulls needing to defend this area to keep the broader focus on further upside. Below there, 1871.04 is next support to note.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.