Daily Market Recap – GOLD prices plunge after US statistics

Precious metals are falling heavily on Thursday after an unexpected rise in US retail sales boosted the dollar. The drop came after the greenback rose after the US reported a 0.7% increase in retail sales last month, compared to the consensus forecast of a 0.8% decline.

The positive economic data boosted the dollar, with the ICE Dollar Index rising 0.34% to 92.89 points, its highest level since late August.

Bond yields also rose, hurting the precious metals as a whole. The yield on the US 10-year bond rose 3.7 basis points to 1.34%.

In addition, investors believe that precious metals prices are likely to be volatile in the days ahead. They are waiting for the US Federal Reserve to clarify its plans to reduce the bond purchases that provided liquidity to the markets during the Covid-19 crisis.

Traders will also be on the lookout for clues on the timing of potential interest rate hikes. The Fed's meeting is scheduled for September 21-22.

Given the turn of events and the Fed's willingness to reduce asset purchases, gold prices could fall further in the absence of a bullish catalyst.

From a technical perspective, the chart patterns are deteriorating. It must be noted that the yellow metal was supported by a bullish oblique in place since March 2021. Thus, the nearing of a break of the trend line does not bode well for the future.

The weekly close will be key to the future direction of prices. If the support at 1,750 does not give way under selling pressure, then a consolidation trading range phase is possible. In this scenario, we could see prices move between 1,830 and 1,750.

(Chart Source: Tradingview 16.09.2021)

On the other hand, an incursion below 1,750 would lead to a continuation of the downward flow towards the next meaningful support around 1,680.

Disclaimer: This material has been created for information purposes only. All views expressed in this document are my own and do not necessarily represent the opinions of any entity.