Gold is currently stuck in a deep defensive posture, trading at around $4,120 per troy ounce. After taking a 6.5% hit in September, bullion continues to be held back by a strong US dollar and high government bond yields. With the Federal Reserve (Fed) sticking to its hawkish monetary policy, the fundamental fuel needed for a genuine price recovery is practically out of reach.
The primary anchor dragging down the safe-haven asset is an aggressive sell-off in the American debt market. The 10-year Treasury yield has cleared the 5.3% level to touch multi-year highs. As these fixed-income instruments offer really juicy returns, they dramatically increase the opportunity cost of holding the precious metal, which pays no interest. To make matters worse, a roaring greenback acts as a steep barrier for international buyers, pricing out those using weaker foreign currencies and drying up global demand.
Mounting anxiety over what the central bank will do next is also choking bullion. Despite visible signs of cooling in the US labor market, investors are unwilling to fight the Fed. They are now pricing in a staggering 80% probability of another interest rate hike in December. The grim reality of borrowing costs staying higher for longer will keep the dollar and Treasury yields elevated, sealing a tight lid on any near-term gold rallies.
From a technical standpoint, sellers are in complete control, as prices carve out a persistent downward trajectory. With key defenses crumbling, the path of least resistance remains heavily skewed to the short side. The primary target for this bearish wave is the psychological support floor of $3,940 per troy ounce.
The ultimate recommendation is to sell gold at the current price ($4,120), aiming to reach $3,940 within two weeks. To keep risk in check in case the market moves against us, place a Stop Loss order at $4,300.
This content is for informational purposes only and is not intended to be investing advice.
