The past few days have been rough for gold which is heading for a second weekly decline.
Prices are currently trading near their lowest point since 2020 thanks to a broadly stronger dollar and rising Treasury yields which punched above 4.25% for the first time since 2008. Given how gold is a zero-yielding asset that tends to perform poorly in a high-interest rate environment, the outlook certainly looks gloomy. Fundamentally, prices are likely to sink lower thanks to Fed hike bets while on the technical front the candlesticks are trading well below the 50, 100, and 200-day Simple Moving Average. A strong breakdown and daily close below $1615 could open the doors towards $1600 and $1570. Should $1615 prove to be reliable support, a rebound back towards $1655 and $1680 could be on the cards.
It may be worth keeping a close eye on the US Q3 GDP and PCE Index in the week ahead which may influence the dollar. Should these reports reinforce expectations around the Fed raising interest rates aggressively beyond November, this may weaken gold prices further as the dollar appreciates.