Gold – Further to fall?

How much lower will it go?

Gold continued to fall on Tuesday, breaking below $1,740 and further losses could be on the cards.

The yellow metal has come under significant pressure as central banks have prepared the markets for the end of pandemic era stimulus and even rate hikes as early as next year.

Even higher inflation hasn’t tempted traders back in, despite its reputation as a hedge, while yesterday’s bout of risk aversion also did nothing to lift it, quite the opposite.

That leaves gold languishing at seven-week lows and it may get worse yet. We have seen a small recovery today but that has only brought it back towards $1,740 – prior support – where it now seeing significant resistance.

A rotation off this level would act as confirmation of the initial breakout and could turn attention back towards $1,700, maybe even $1,680, last months flash crash low and long-term support.

Tough days may still lie ahead.

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Craig Erlam

Craig Erlam

Former Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary.

His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News.

Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.