The price of gold is falling

October 29, 2021

Gold witnessed aggressive selling during the early North American session and dived to one-and-half-week lows, around the $1,776 region in the last hour. The US dollar was back in demand on the last trading day of the week and has now reversed a major part of the previous day’s dismal US GDP-led slide to one-month lows. This, in turn, was seen as a key factor that weighed heavily on dollar-denominated commodities, including gold.

his, in turn, allowed the yield on the benchmark 10-year US government bond to hold steady above the 1.70% threshold, which further contributed to drive flows away from the non-yielding gold. Apart from this, the latest leg of a sudden fall over the past hour or so could further be attributed to some technical selling below 200-hour SMA. However, a softer risk tone – as depicted by a cautious mood around the equity markets – could extend some support to the safe-haven XAU/USD.

From a technical perspective, repeated failures near the $1,820-25 resistance zone and the subsequent fall suggests that the recent positive move has run out of steam. Hence, some follow-through weakness towards testing the next relevant support, near the $1,765 region, remains a distinct possibility. The corrective pullback from multi-week tops could further get extended towards October monthly swing lows, around the $1,755 area.