Gold (GLD) prices slipped on Monday on the robust dollar and U.S. Treasury yields. The greenback benefited from the conflict in Ukraine and rose to more than a week high.
It made the bullion more expensive and less attractive for investors using rival currencies. The U.S. 10-year Treasury note soared close to multi-year highs on the Federal Reserve’s monetary tightening. It raised the opportunity cost of the non-interest-bearing metal.
Spot gold is currently trading at $1,930.10 per ounce as of 0850 GMT.
Jeffrey Halley, a senior analyst at OANDA, noted that gold’s decline pushed nervous longs to the exit door. The Fed raised interest rates last week. And traders are pricing in a probability of a 50-basis points rate hike in May.
On the technical front, DailyFX analyst Richard Snow said gold’s spontaneous breakout may be short-lived. The bullion broke out of the symmetrical triangle yesterday and climbed towards $1,996 but failed to close above the level. That indicates the bullish momentum may have stalled. Moreover, gold volatility has declined, which was better suited to range trading than breakout situations. He predicted that if gold volatility continues to fall, the metal could plunge to the pre-invasion price level of $1,907 per ounce.
FXStree senior analyst Dhwani Mehta added that gold price is back in the red zone. She sees a crucial support level at $1,935 or 23.6% Fibonacci retracement levels. If the bullion falls below that, the next support would be $1,910 and $1,895. On the upside, Mehta sees immediate resistance at $1,961.
In physical gold trading, high prices prompted some people in India to sell old jewelry. Local prices climbed near all-time highs earlier in March. Dealers had to offer discounts of up to $53 per ounce. A local dealer said retail buyers are waiting for a correction and jewelers are not buying to close their accounts. He expects the country’s gold imports to fall in March due to weak demand.
In China, the resurgence in COVID-19 cases dented the demand for gold. Dealers offered a $5 per ounce discount. The price jump and slow seasonal demand also pulled gold prices down.
In a related development, the holdings of the largest gold-backed exchange-traded fund in the world, SPDR Gold Trust, rose 0.5% on Friday on 1,093.18 tons. It was the highest level since late February 2021.
The Central Bank of Russia announced that it would resume buying gold at a fixed price of 5,000 rubles per gram. It aims to ensure sustainable supply and the uninterrupted functioning of golf producers.
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