King Dollar Throttles Gold, Breaking $1,650 Support

By Barani Krishnan

Investing.com -- There’s no escaping the wrath of the dollar, as gold traders are finding out.

One of the yellow metal’s most sacred support lines that held through its worst selling storms of the past two years — $1,650 an ounce — broke Friday as the Dollar Index continued with its onslaught of one 20-year high after another.

Bond yields, tracking the 10-Year U.S. Treasury note, scaled 12-½ year highs after the latest session peak above 3.8%. The yields reflect so-called real interest rates, or where the market thinks key lending rates set by the Federal Reserve would go.

The Fed on Wednesday raised rates by 75 basis points for a third straight month in a row, bringing key lending rates to a peak of 3.0% — or 0.8% below the bond yield level. To be sure, Fed Chairman Jerome Powell indicated there would be no let up for now in the central bank’s hiking cycle as it battles to bring inflation raging at above 8% a year to its long-standing target of 2% per annum.

Gold’s break below $1,680 “was a big deal but it hasn't really been the catalyst for anything since,” said Craig Erlam, analyst at online trading platform OANDA.

That makes a break of the $1,650 support “a secondary confirmation of the initial breakout” and a “very bearish signal”, he added.

Gold’s benchmark futures contract on New York’s Comex, December, settled down $25.50, or 1.6%, at $1,655.60 per ounce. The session low was $1,648.60.

The spot price of bullion, which is more closely followed than futures by some traders, was down $26.98, or 1.6%, to $1,644.35 by 15:00 ET (19:00 GMT). Spot gold’s bottom for the day was $1,639.96.

“With spot gold cracking $1,640, it could go towards $1,620 next, or even $1,600,” warned Sunil Kumar Dixit, chief technical strategist at SKCharting.com

“However, if the Dollar Index starts to decline from 113 and heads towards 104, the $1,620-$1,600 zone in gold can attract value buyers. But $1,560, which sits at a 50% Fibonacci retracement of gold’s previous rally, is a more convincing rallying point that could bring bulls back to recent highs.”

Begin trading today! Create an account by completing our form

Privacy Notice

At One Financial Markets we are committed to safeguarding your privacy.

Please see our Privacy Policy for details about what information is collected from you and why it is collected. We do not sell your information or use it other than as described in the Policy.

Please note that it is in our legitimate business interest to send you certain marketing emails from time to time. However, if you would prefer not to receive these you can opt-out by ticking the box below.

Alternatively, you can use the unsubscribe link at the bottom of the Demo account confirmation email or any subsequent emails we send.

By completing the form and downloading the platform you agree with the use of your personal information as detailed in the Policy.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 82.4% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Back to top

Office network
  • London Office
    One Financial Markets 

    1 Finsbury Market
    London
    EC2A 2BN
    United Kingdom


    T:  + 44 ( 0 ) 203 857 2000
    E:  info@ofmarkets.com
  • Dubai Office
    One Financial Markets 
    OT19-39 Central Park Tower
    Dubai International Finance Centre
    Dubai
    United Arab Emirates
     
    T: + 00 971 44 22 888
    E:  info@ofmarkets.com
     

One Financial Markets is the trading name of Axi Financial Services (UK) Ltd, a company registered in England with company number 6050593. Axi Financial Services Ltd is authorised and regulated by the Financial Conduct Authority in the UK (under firm reference number 466201) and the Financial Sector Conduct Authority in South Africa (with FSP number 45784).

The information on this site is not directed at residents of the United States, Belgium, Poland or any particular country outside the UK and is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

www.onefinancialmarkets.com is owned and operated by Axi Financial Services (UK) Ltd.

Award winning broker
We have been presented with a number of awards that recognise the quality of our service and dedication to our clients :

Best FSA Regulated Broker
Saudi Money Expo

Best Education Product
Saudi Money Expo

Best Broker - Online Trading
IAIR Awards

Best Institutional Broker
Saudi Money Expo

Best FX Services Broker
CN Forex

Top International
FX Broker 2015

Saudi Money Expo

Broker of the Year
Online Trading – Middle East

IAIR Awards

Best Forex
Customer Service 2018

JFEX Awards

We accept the following payment methods: