- The gold market has fallen a bit during the early part of the trading session here on Wednesday as interest rates have started to tick a little bit higher.
- Part of this, although not all of it because it had started previously, is in reaction to the ISM services PMI figures.
- Those came out hotter than anticipated and that gives the Federal Reserve yet another reason to think about keeping interest rates higher for longer.
A lot of what you've seen in gold goes counter to what you've been told if people think it's as simple as we buy gold when there's a war, but the reality is that interest rates being as stubbornly high as they are really work against the value of gold. After all, gold is a non-yielding asset and that will continue to be one of the biggest problems here.
Technical Support and Resistance Levels
The $4,600 level above is a large, round, psychologically significant figure and an area that has been important multiple times. The 50-day EMA sits just above there, so I think that makes a decent ceiling at the moment.
Underneath current XAU/USD pricing, we have the 200-day EMA near $4,380 offering a bit of a floor. As we get the jobs number on Friday, I don't know that golds got anywhere to go. I think it grinds back and forth. I do like buying dips occasionally, but I don't hang on to the position.
Longer term, I do think that interest rates have to come down, gold will go higher, whatever, but as things stand right now, there's no real hope of that in the short term, and therefore I think we're just kind of stuck. We'll react to the 10-year yield. If it rises, gold will fall, and if it falls, gold will rise. Until we get some type of certainty out of the Middle East though, and or at the very least get past the non-farm payroll announcement, I think this is a sideways market.
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