Gold prices continue to plummet, hitting new lows, yet a faint glimmer of optimism lingers

The gold price has been under pressure in recent days, with a significant sell-off leading to a 2-year low on Friday. This downward trend is largely due to the break below a significant support zone around $1,680, which has put additional pressure on the precious metal.

In the past week, neither the Bank of England nor the Swiss National Bank raised their interest rates. The Swiss National Bank's President, Martin Schlegel, indicated a willingness to cut rates again if needed, but no recent rate hikes were reported for either institution. Simultaneously, the U.S. dollar and government bond yields hit new highs, making fixed-income securities more attractive to investors than gold.

The Federal Reserve, along with other central banks like the Bank of England and the Swiss National Bank, have taken a restrictive stance and increased interest rates. This move has been driven by a priority to fight inflation, even at the risk of an economic slowdown, signaling longer-term rising interest rates.

In this monetary environment, gold is struggling. For weeks, there have been outflows from gold ETFs and signs of selling panic at futures markets. The Commitments of Traders Report (CoT) published on Friday shows continued selling pressure from both small and large speculators.

The gold price is being affected by a strong dollar, as it is traded in dollars on the world market. This means that a stronger dollar makes gold more expensive, further discouraging investment. The falling trendline could hinder any potential recovery attempts in the gold price.

If the gold price can overcome the resistance at $1,655, a rally towards $1,682/$1,688 could occur. However, as long as the gold price remains below $1,680, further trouble is likely. The overall downward trend in the gold price is intact and confirmed by the break below the $1,680 mark.

Potential correction targets for the gold price are $1,600 and the 2019 high at $1,566. If the gold price overcomes the resistance at $1,682/$1,688, it could potentially reach $1,724 and $1,735. However, with the current economic climate and the strength of the dollar, these targets may prove challenging.

In conclusion, the gold price is facing significant headwinds due to rising interest rates and a strong dollar. Until these factors change, the gold market is likely to remain under pressure.

Gold prices continue to plummet, hitting new lows, yet a faint glimmer of optimism lingers