Gold moves in a clear downtrend with the pivot point at 1,700 US dollars.
Gold prices were volatile last week, as conflicting factors used to work simultaneously. While ECB and other central banks` hawkish tones put pressure on gold prices, the dollar`s decline boosted prices.
This week, while on Monday and the first half of Tuesday, with the weakening US dollar, the gold price gained a little bit; Tuesday, with the upside surprise of US inflation, USD demand increased and put more pressure on none-yielding assets, such as gold and silver, as Bond Yields sharply increasing, especially yields on Two-years treasury bonds.
After this news and data, Thursday`s economic data also increased the Yields on US bonds and caused another free fall in the XAUUSD chart. With this fall, yellow metal finally breached the critical support at 1,700 US dollars, with a 3.7% fall from Tuesday`s high to the current price at $1,667, which is the lowest level seen in 2022.
Gold has been pushed down primarily because of increasing US dollar and US treasury yields. The dollar exhibited high volatility last week, and the dollar`s decline towards the end of the week boosted demand for gold. While the US dollar index is trying to stabilize its rate, last week tested its fresh 20-year high of 110.7, while US Treasury yields remained strong throughout, with the US 10-year bond yielding approximately 3.45% and 2-year bond yield at 3.84%.
Currently, we have two scenarios with these market conditions and sentiment. If central banks` measures cause a severe recession, gold can also fall in line with other assets. On the other hand, if market participants feel insecure, but do not settle for a severe recession, then gold`s safe haven can save it from more falls.
From the technical point of view, in all main charts, gold moves in a clear downtrend with a pivot point at 1,700 US dollars.
