Gold Price Slumps Amid Existing Elevated Interest Rates

Gold prices continued their downward trajectory today, weighed down by persistently strong US interest rates. This decline brings the market closer to a critical support level – a key trend line – whose breach could signal further weakness. The precious metal is trading at 2,620.95, down -0.45% on the day.

Technical Factors

The recent weakness in gold follows a similar pattern observed in silver, where a crucial trend line was broken. A similar breach in gold could open the door for a significant decline, potentially targeting the $2,550 level, and possibly even the 200-day EMA near $2,500.

Given the prevailing elevated interest rate environment, buying gold at these levels appears unfavorable. A sustained decline in US interest rates is necessary to reinvigorate the gold market.

Furthermore, the current holiday season has significantly reduced market liquidity, increasing volatility and amplifying price swings. In the light of these factors, a cautious approach is warranted. Traders apparently tend to consider waiting for a significant bounce back above the 50-day EMA before considering long positions. Alternatively, they may choose to observe the market from the sidelines, allowing it to work off some of the recent upward momentum and potentially offer more attractive entry points for buyers.