At Extreme Investor Network, we provide invaluable insights into the ever-changing world of the stock market and trading. Today, we dive into the recent fluctuations in the U.S. dollar index and its impact on gold prices.
The U.S. dollar has reached a one-year high, reaching 107.064, which has caused gold prices to decline. This surge in the dollar’s strength, fueled by positive economic data such as October retail sales increasing by 0.4% and revised September figures, has diminished gold’s attractiveness to international investors. As a result, gold has lost its position as a safe-haven asset during times of economic uncertainty.
One key question on investors’ minds is whether economic data is influencing Federal Reserve policy expectations. The latest inflation data reveals core CPI at 3.3%, well above the Federal Reserve’s 2% target. This has led to a shift in rate-cut expectations, with the probability of a December reduction dropping from 83% to 59%. Gold, which typically thrives in a low-rate environment, has faced selling pressure as traders adjust to the possibility of stable interest rates.
From a technical standpoint, gold’s weekly close just above $2,533.76 indicates that this crucial support level is still in play. However, a failure to hold above it could lead to a sharp decline towards the 50% retracement level at $2,387.23. Resistance levels are observed at $2,571.68 and $2,631.04, with last week’s high at $2,686.17 and low at $2,536.85.
Looking ahead, the short-term outlook for gold remains bearish due to sustained dollar strength and elevated yields. A break below $2,533.76 may pave the way for further losses, while consolidation at current levels could trigger a technical rebound above $2,571.68. Investors will closely monitor upcoming Federal Reserve commentary and economic data for clearer guidance on market direction.
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