The gold price (XAU/USD) continues to drop, losing 0.15 percent on the day so far ahead of US data, while the greenback continues to attract buyers despite how far it has already gained. Since last week, the asset has been trending downward after failing to hold above the psychological resistance of $2,000.

Rising yields and a stronger currency are weighing on GOLD prices, which have fallen below $1,900 as investor demand dwindles amid the potential of aggressive rate hikes and faster quantitative tightening. “However, rising geopolitical risk and inflation should continue to support investment demand.” As a result, “ETF flows continue high at 106 million ounces.”

“While the yellow metal’s prices have remained extremely resilient against an aggressively hawkish Fed, as a protracted war in Ukraine simultaneously raised both geopolitical uncertainty and inflation risks, thereby fueling demand for havens, we see few participants left with an appetite to buy gold,” TD Securities analysts have argued. According to the experts, Comex shorts have been thoroughly wiped out, removing some fuel for price gains, while safe-haven flows have a history of dissipating.

Meanwhile, US central bank authorities have already urged investors to brace themselves for higher inflation. The US Consumer Price Index (CPI) is currently at 8.5 percent for March, the highest since December 1981, up from 7.9 percent in February, and weighing on gold.

Fed Chair Jerome Powell has already spoiled the surprise by declaring that a 50 basis point (bps) interest rate hike is underway. The Fed’s primary concern is inflation, yet, the tight labor market has helped alleviate the Fed’s woes. The agenda of balance sheet reduction was not widely discussed, but the Fed is likely to turn the wheel to remove liquidity from the market faster, resulting in a sharp drop in gold prices.

Gold Technical Outlook

The gold price finished yesterday below 1890.00, adding more evidence to the continuation of the negative wave, which targets 1850.00 as the next significant station, structured inside the bearish channel seen on the chart.

As a result, we anticipate further declines in the coming sessions, aided by the negative pressure produced by the EMA50, while adding that holding below 1890.00 constitutes the starting condition to continue the proposed decrease.

Today’s trading range is likely to be between 1860.00 support and 1900.00 resistance.

Today’s projected trend is bearish. Good luck!