Gold – Continues to struggle amid hawkish central bank warnings

  • Gold eyeing a seventh consecutive decline?
  • JOLTS job openings reinforce the view of a strong labor market
  • Major technical support below if sell-off continues

Gold is on course to extend its losing run to seven sessions, with the yellow metal down around half a percent following the US JOLTS report.

Rising bond yields have hammered gold prices recently which have fallen from $1,900 to near $1,800 remarkably fast. This will be the next test if the sell-off continues, with gold having rebounded strongly off this level back in February and March before rallying back toward record highs.

I’m not sure traders will be that confident of a repeat performance but it will be an interesting test amid some very hawkish central bank commentary. The price had recovered earlier in the day but a JOLTS report put an end to that, with the data further fueling the belief that the labor market remains extremely resilient, reinforcing the case for another Fed rate hike.

Strong momentum with the recent fall in gold

The chart doesn’t look great for gold, not just because of the scale of the recent decline but the momentum indicators look very bearish.


Source – OANDA on Trading View

That’s obviously unsurprising because of the nature of the selling this past week or so. What will be interesting now is, if we are seeing some reprieve, how deep it will be. A shallow recovery could reinforce the bearish view in gold as it nears what looks an important support zone around $1,780-$1,800.

$1,860 and $1,880 stand out as potential areas of resistance if we do see a move higher from here, not least because they fall around key fib levels – 38.2% and 50%.

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Craig Erlam

Craig Erlam

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.
Craig Erlam