Gold has faced another challenging day in the markets, slipping further to $1,939.60, below yesterday’s low, amid diminishing safe-haven appeal and a more hawkish tone from Federal Reserve Chair Jerome Powell.
The precious metal, which had soared to $2,000 levels just last week amid escalating tensions in the Middle East, has now lost over $50. Analysts say this decline is down to the easing of safe-haven demand, influenced by the relatively stable situation in the Israel-Hamas conflict, allowing for a shift in investor sentiment towards riskier assets.
Jim Wycoff, senior analyst at Kitco Metals, commented on the short-term outlook for gold, stating, “Gold will continue to trade sideways to lower unless we see an escalation in geopolitical events, weak U.S. economic reports, or if the Fed suggests it is done raising rates.”
The recent comments from Federal Reserve officials expressing uncertainty about whether interest rates are high enough to combat inflation have further impacted market expectations. The notion that U.S. interest rates may not have peaked yet has introduced additional headwinds for gold.
From a technical perspective, as I pointed out yesterday that the 50% daily Fibonacci retracement, positioned just above $1,900, could offer some support. However, should gold breach this level, the 61.8 Fibonacci retracement, around $1,885, is identified as the next crucial support level.
