Gold Prices Drop to $2,615 Amid Strong Dollar and Mixed Fed Rate Cut Expectations
Arslan Butt•Wednesday, October 9, 2024•2 min read
Gold (XAU/USD) remains under intense selling pressure, dropping to $2,621 with an intra-day low of $2,615. The precious metal has been in a six-day losing streak, driven largely by the strengthening U.S. dollar, which hovers near a seven-week high.
Market sentiment turned bearish after expectations for a significant Federal Reserve rate cut in November diminished, as indicated by the CME Group’s FedWatch Tool.
The likelihood of a 25-basis-point rate cut now stands at 85%, but there’s little chance of aggressive rate reductions by year-end. Mixed signals from Fed officials, with some favoring cautious rate cuts while others remain data-dependent, have left traders on edge, further pressuring gold.
Technical Analysis: Key Levels and Indicators to Watch
From a technical perspective, gold is trading below its 50-day Exponential Moving Average (EMA) at $2,639.77, signaling sustained bearish momentum. Immediate support is noted at $2,604.83, with subsequent levels at $2,594.37 and $2,585.14 acting as potential floors.
The Relative Strength Index (RSI) stands at 43.23, indicating bearish sentiment but nearing oversold territory. On the upside, resistance levels are seen at $2,634.46 and $2,646.64, with a more substantial barrier at $2,659.51. A break above the $2,624 pivot point could signal a potential reversal, but failing to hold above this level may lead to further declines.
Geopolitical Tensions and Technical Selling Add Pressure
Gold’s decline is also influenced by easing geopolitical tensions. Recent reports suggest that Hezbollah might be open to a ceasefire, easing concerns of a broader conflict in the Middle East. This has reduced gold’s appeal as a safe-haven asset.
Additionally, technical selling has accelerated after the price broke below the key $2,630 support level, triggering further downward momentum. For now, the combination of a strong U.S. dollar, mixed Fed signals, and easing geopolitical tensions continues to drive gold prices lower.
Key Insights:
Gold prices fell to $2,615, extending a six-day losing streak.
Fed’s rate cut outlook is uncertain, weakening gold’s safe-haven demand.
Technical selling intensified after gold breached the $2,630 support level.
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.