New York, NY – The price of gold (XAU/USD) experienced a significant drop, reaching a two-month low on Tuesday due to higher-than-anticipated U.S. CPI data. The hawkish repricing of Fed interest rate expectations led to an increase in U.S. Treasury yields and a strengthening of the U.S. dollar. This situation has raised concerns about the potential for downward pressure on precious metals.
The U.S. central bank’s potential delay in starting an easing cycle could result in higher bond yields and a stronger U.S. currency for an extended period. From a technical standpoint, gold fell below $2,005 and quickly approached its 50-day simple moving average at $1,990. If the prices fail to stabilize around these levels and continue to decline, a further move towards $1,975 is anticipated, with extra attention on $1,965 in the event of additional weakness.
In the case of a bullish reversal, resistance is expected around $2,005, with focus shifting to the 50-day simple moving average near $2,030. This scenario seems unlikely at the moment, given the absence of positive catalysts. The retail positioning is crucial in shaping gold’s trajectory in the near term, and understanding the sentiment can provide valuable insights and strategies for traders.
Looking at the Nasdaq 100, the index experienced a significant setback on Tuesday, falling more than 1.5% due to rising U.S. rates following higher-than-expected CPI numbers. With yields approaching fresh highs for the year, stocks may face challenges in maintaining their current levels, potentially leading to a substantial correction in the market. Key support levels to watch for are around 17,555 and 17,150, while resistance is expected around the all-time high of 18,125.
The EUR/USD pair also saw a sharp decline, reaching its lowest level in three months and closing below support at 1.0720. If this breakdown persists, sellers could target 1.0650 and potentially move towards 1.0520. On the other hand, if buyers regain control and initiate a turnaround, the first resistance to monitor is around 1.0720, with the next zone of interest near 1.0800, where the 100-day simple moving average aligns with a short-term descending trendline.
Understanding the technical analysis and the impact of various economic factors on these markets is crucial for traders looking to navigate the current volatility and plan their next moves.