The dollar continues to sit in a commanding position in trading this week and that is weighing further on gold today. The yellow metal is down 0.4% to $1,935 levels now as sellers are contesting key technical support at the moment:
Gold (XAU/USD) daily chart
The 100-day moving average (red line) at $1,936.66 and 50.0 Fib retracement level of the swing higher from March to May at $1,935.84 are both being challenged. And a break below that region is going to set off the next downside leg in gold towards the $1,900 mark.
It’s been a rough month for gold after coming close to testing its 2020 and 2022 highs before a reversal in the Fed outlook has led to the turnaround that we are seeing.
Markets have now cast aside rate cuts by the Fed and have switched back to being convinced that the central bank will be sticking to a higher for longer narrative instead. Just look at the change in Fed funds futures below: