Gold plummet nears multi-year lows

<p>In the aftermath of this past Friday’s US jobs data that came out much better than expected at 271,000 added jobs versus a prior consensus […]</p>

In the aftermath of this past Friday’s US jobs data that came out much better than expected at 271,000 added jobs versus a prior consensus forecast of 181,000, gold predictably extended its precipitous tumble of the past three weeks.

The precious metal’s recent losing streak has been sharp and virtually unrelenting as market anticipation over a potential December rate hike in the U.S. has grown as a result of somewhat hawkish Fed comments and relatively buoyant economic data. Friday’s substantially positive US non-farm payrolls report further supported the case for a rate hike next month.

During the course of the past three weeks, the price of gold has broken down below several key support factors, including: its 200-day moving average, its 50-day moving average, the $1140 support area, an uptrend channel extending back to this past summer’s lows around $1080 and, most recently, the key $1100 psychological support level.

Gold Daily Chart


Even after breaking down below all of these major support factors, gold’s stance and outlook continue to remain moderately bearish as we move towards the Fed’s crucial meeting next month.

Currently trading not far above the five-year low of $1077 that was just set this past July, price is nearing a critical support juncture. A generally rising US dollar and the specter of rising US interest rates should continue to weigh on the precious metal, at least until the December Fed meeting.

If this pressure results in a breakdown below the $1080 support level and this past July’s noted $1077 low, the price of gold could potentially follow-through with a further drop towards the $1050 target objective. This level is also around the 161.8% Fibonacci extension of the last bullish run within the noted uptrend channel.

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.