Gold stays under pressure after break of key technical level this week
The story for precious metals now is that it looks like things will get much worse before they get any better. The fate of gold and silver is largely tied to the US-Iran conflict and unless something changes with regards to the Strait of Hormuz, it will be tough to see a material turnaround in sentiment.
As inflation pressures ramp up and risk sentiment being hit again, it is piling on the pressure on precious metals. The former is also tied to a growingly more hawkish Fed outlook as well. And that's another factor that is weighing on gold and silver prices.
Another major point of concern for gold is the break of the 200-day moving average (blue line). That came on Friday amid further selling pressure in risky assets, prompting more exits in gold positions. As a reminder, gold and silver have been among the more popular leveraged trades in the past year.
But also, the hotter US jobs report is making for a more hawkish Fed picture and that is also not helping the constructive view towards gold. And when you add in the technical break above, there are a myriad of factors working against the precious metal currently.
Going back to the chart, this is the first time since October 2023 that gold has dropped below both its 100 (red line) and 200-day moving averages. That's an ominous signal of a shift in momentum, considering the near three-year upside run.
And when corrections like these hit, they can tend to run deep.
For gold, the next key support level to watch will be the March low at $4,099. If that gives way, the $4,000 mark will be eyed next. And if buyers are not able to manage their risk positioning properly, this may very well turn ugly and I could envisage a drop back towards $3,300 or $3,500 before actual dip buying starts to come in again.
Looking to silver, it is much of the same:
The precious metal is also dropping back below both its 100 (red line) and 200-day (blue line) moving averages this week. And that will mark the first time since April last year that price action traded below both key levels. This time around, the momentum shift looks to be more profound of course.
And as seen above, a daily break below $64 could really spell much trouble for the precious metal in seeing the correction run deeper.
For now, precious metals have little choice but to ride out the US-Iran storm until the Strait of Hormuz reopens. In that lieu, things could get really, really rough considering how the standoff continues to run with no end in sight.
This article was written by Justin Low at investinglive.com.提供 MainLink：Investinglive RSS Breaking News Feed
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