Gold prices fell to their lowest level in more than a week on Friday, as a result of stronger USD, after US data on inflation confirmed that it remains “hot” last month, returning the focus on the upcoming Fed meeting and prospects for tightening monetary policy.
Consumer spending data has fueled concerns about potentially aggressive monetary policy action by the Fed, sending 10-year Treasury yields in the US to 1.6190%, with the USD rising 0.8%.
While gold is considered an inflation hedge, reduced incentives and rising interest rates tend to push government bond yields and the USD upward, which reduces the attractiveness of the precious metal.
The Fed is expected to announce when the stimulus reduction will begin at the November 2-3 meeting.
“There is nothing to stop the decline of gold right now,” said Philip Streibel of Blue Line Futures, adding that funds become active sellers every time gold crosses the key $ 1800 level.
Despite the decline, gold closed the month, up 1.5%.
After the unsuccessful attempt to close above the support zone and the main uptrend, we see a strong reduction, as the price breaks through the uptrend and with a continuing decline we could see a test of the structural support zone around $ 1,765 and $ 1,755.
Junior Trader Nikolay Stoychev