Gold Stalls at 100-Day SMA as US Yields Rise
Gold prices face significant resistance at the 100-day moving average while rising US Treasury yields and a stronger dollar weigh on the non-yielding metal.
Gold trades at $4,295, down 0.06% on Tuesday. The metal is capped by resistance at the 100-day Simple Moving Average (SMA) at $4,328. This level acts as a barrier to further upside momentum.
US 10-year Treasury yields have stabilized at 5.00%. This is the highest level in nearly 19 years. The rise in yields reduces the appeal of gold, an asset that does not pay interest.
Fed rate hike odds near certainty
Markets price in a 95% probability of a 25-basis-point rate hike by the Federal Reserve. The new rate range would be 3.75% to 4.00%. Odds for a hike at the October meeting stand at 97%.
The probability of a December rate increase is 99%. This tightens global financial conditions. Higher real yields make gold less attractive compared to yielding assets like bonds.
Geopolitical tensions boost inflation fears
Houthi attacks on the Saudi East-West oil pipeline disrupted supply. Production of 7 million barrels per day is suspended for three to five weeks. Energy prices rose in response to this disruption.
Investors fear renewed inflation from higher energy costs. This sentiment pushed bond yields higher. The US Dollar Index (DXY) rose 0.19% to 99.66. A stronger dollar typically pressures gold prices.
Key technical levels define the range
Gold is trapped between the 50-day and 100-day SMAs. The 50-day SMA at $4,275 serves as the primary support. A break below this level opens the path to $4,202.
If support fails, the next target is the swing low at $3,996. This level is below the $4,000 psychological mark. Traders watch for a breakout above $4,328 for bullish confirmation. According to GN auto markets/commodities: gold prices, the Relative Strength Index remains bearish but neutral.
