Gold Rebounds from 7-Month Low, but Weekly Losses Persist
Investing.com – Gold experienced a dip to seven-month lows on Friday, only to rebound and finish the day higher, although weekly losses remained. The yellow metal has faced a challenging period since the start of October, with concerns over a potential interest rate hike by the Federal Reserve amplified by strong US jobs data, leading to a rally in Treasury yields and the dollar.
December’s most active contract for gold on New York’s Comex settled Friday’s trading session at $1845.2 per ounce, up $13.40 or 0.7%. Earlier in the day, it had reached a low of $1,823.55, its lowest level in seven months.
The spot price, which is closely followed by some traders, was up $11.44 or 0.6% to $1,831.70 by 15:00 ET (19:00 GMT) on the same day. Spot gold had hit a seven-month low of $1,810.47 earlier in the day.
Both Comex gold and the spot price recorded weekly losses in response to the recent sell-off in bonds and the strengthening of the dollar. December gold, which had already fallen by 3.1% the previous week, dropped an additional 1.1% this week.
Spot Gold’s Potential Support Level and Central Bank Interest
Spot gold experienced a 4% decline last week, the largest drop since the near 6% plunge witnessed during the week ending June 11, 2021. It slid by nearly 1% this week.
According to Sunil Kumar Dixit, a technical analyst for gold at SKCharting.com, the spot price could potentially reach the $1,750 support level as central banks are waiting to accumulate significant amounts of gold within the price range of $1,760 to $1,750. Dixit adds, “The rampant US jobs growth for September didn’t immediately bring the new wave of selling expected in gold, but I think whatever rebound you’re seeing now won’t last.”
In September, the US Labor Department reported 336,000 new non-farm payrolls, the highest figure since January’s 517,000, surpassing the 187,000 seen in August and the average forecast of 170,000 for September by Wall Street economists.
Economist Adam Button commented on the ForexLive forum, stating, “This is a problem as it validates the recent move up in Treasury yields.”
The US Dollar Index, which measures the greenback against six major currencies, hovered just below 106.4, up for the day but down from this week’s 11-month high of 107.35.
Yields on 10-year US Treasury bonds, benchmarked against the , reached a new 16-year high of 4.892.
Conclusion
While gold experienced a rebound from its seven-month low, weekly losses persisted due to factors such as the potential for an interest rate hike by the Federal Reserve and the strengthening US dollar. The spot price could potentially find support at the $1,750 level, as central banks show interest in accumulating gold within a specific price range. However, the recent rebound in gold prices may not be sustained for long.
