BY ONOME AMUGE
Gold prices continued to trade in the red, registering the fourth straight weekly decline amid a spike in the U.S. dollar index which has rallied since the last week of February, while a similar rise in the Federal Reserve dampened gold’s bullish prospects.
Fourth-month gold futures for June on Comex shed $16.40 or one percent to settle at $1,808.20 per ounce at the close of the day, down four percent for the week.
Recall that gold enjoyed positive sentiments following Russia’s invasion of Ukraine, moving up from $1,911 per ounce to peak at around $2,078 per ounce in March at an increase of 8.74 percent.
Following its continuous decline, gold is said to have wiped out any price boost it had gained following the Ukraine war.
In his remarks, Fawad Razaqzada, market analyst at City Index, said gold prices are feeling downward pressure due to the hawkish stance of the Fed and safe-haven flows into the dollar.
“Gold has not found any kind of support in times like now when you’d expect haven demand to be strong. We’ve seen lots of support levels breakdown, which is discouraging for short-term traders,” Razaqzad added.
Analysts also observed that tightening monetary conditions around the world is working against gold, which is sensitive to rising U.S. short-term interest rates and bond yields as this raises the opportunity cost of holding the metal.
Jeffrey Halley, a senior commodities analyst who oversees Asia-Pacific markets’ for online trading platform, OANDA, opined that only a sudden U.S. dollar sell-off is likely to change the bearish technical outlook of gold.
Sunil Dixit, chief technical strategist at skcharting.com, a technical research organisation, warned that gold could tumble to $1,700 territory if it fails to clear a string of resistance from the $1,832 to $1,836 range.
Dixit noted further that since the current trend has turned bearish, sellers are very likely to come at the test of the resistance areas.
He added that decisive closing above the range can extend recovery to $1,880, failing which bearish pressures will push gold down to $1800 – $1780, and extend the decline to $1,760 in the week ahead.