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Gold fell 1.8% last week and is now down for a third consecutive week, suggesting that momentum continues to fade following the powerful surge we saw in August. On Friday, the precious metal initially fell in reaction to the US CPI data but then rallied sharply from its lows immediately afterwards in a classic “sell the news” reaction, before fading into the close. Ultimately, gold finished Friday’s session 0.7% higher.
Gold has reversed sharply into major support, with a decline of nearly 9% setting up the first meaningful test of the August breakout.
The true test of trend is what happens after a counter-trend jolt, and that’s where gold as into next week as the overbought trend has just moderated with the largest daily sell-off in two months.
Gold prices continued to jump last week and with the US Treasury playing defense in a debt spiral situation it seems unlikely that austerity and fiscal prudence will enter the equation.
Bond yields pushed higher again on Friday as the consolidation near the upper end of the recent range continued, mirroring the price action of oil prices, posing threat to the gold recovery attempt.
Gold just posted its best week since January, but the breakout now enters the phase that could determine whether a lasting low is finally in place.
Gold has spent six weeks trapped in a tightening range at the yearly low, with the next breakout likely to determine the August outlook.
Gold managed to bounce a bit on Friday, although it was too little to prevent a weekly decline. On the week, the metal fell 2.5%, making its second consecutive weekly decline. Though gold again managed to hold its own above the key $4,000 level on a daily and weekly closing basis, the metal was now flat on the month.
The gold outlook may have turned a bit more bearish heading into the new week, with geopolitics once again being the reason. The recently announced ceasefire agreement between the US and Iran had taken some heat out of the market. There was cautious optimism that weekend talks in Islamabad could lead to an extension beyond the initial two-week window. However, the talks ended at the weekend without any deals.
Gold prices surged for a sixth-week with XAU/USD hitting fresh record highs. Battle lines drawn on the weekly technical chart as the Trump tariffs stoke trade war fears.
Gold prices marked a second weekly rally with a rebound off support now within striking distance of resistance. Battle lines drawn on the XAU/USD weekly technical chart.
