Gold Falls Below $3,947 Support as Sell-Off Continues
Gold ended the week at $3,875, more than 30% below its all-time high, after falling below the $3,947 support level. October outflows totaled $1.4 billion for GLD and more than $70 million for IAU.
Gold continued its steep sell-off, falling to its lowest level since October last year as demand waned. It ended the week at $3,875, more than 30% below its all-time high, with focus now shifting to the upcoming US nonfarm payrolls (NFP) data and trends in the exchange-traded fund (ETF) market. Gold Dropped After the Hawkish Fed Decision Gold and other precious metals fell steeply after the Federal Reserve delivered its October interest rate decision. The bank, as was widely expected, left interest rates unchanged between 3.75% and 4%.
Two officials — Beth Hammack and Lisa Cook — voted to hike interest rates. Kevin Warsh, the bank’s chair, maintained that inflation remains significantly elevated, a view confirmed by the personal consumption expenditures (PCE) report. The PCE price index rose 3.6% in September, while headline consumer price index (CPI) inflation jumped to 3.7% over the same period. Read Also: Ethereum Flashes a Risky Pattern as ETH ETFs Post Their Worst Monthly Outflows on Record US inflation will likely remain at an elevated level because of the rising gasoline and diesel prices, which soared to $4.2 and $6.31, respectively.
Oil prices may keep rising, especially if President Donald Trump restarts the war with Iran. These macro events have led to significant redemptions of the biggest gold ETFs. The SPDR Gold Shares ETF (NYSE: GLD ) had $1.4 billion in outflows in October, while the iShares Gold Trust (NYSE: IAU ) lost over $70 million. The next important catalyst for gold will be the upcoming US nonfarm payrolls (NFP) data.
Economists expect the numbers to show that the economy created over 50k jobs in October after creating 29k in September. A strong report will raise the possibility of the Fed hiking interest rates in December. Gold tends to underperform in periods when the Fed is hiking rates. Gold Price Has Lost a Crucial Support Level Gold price chart | Source: TradingView On the charts, gold has been in a steep sell-off this month.
It has slumped below the important support level of $3,947, its lowest point in July last year, and the lower area value of the fixed range volume profile tool. Gold has already formed a death cross pattern as the 50-day Exponential Moving Average (EMA) crosses the 200-day average. The Average Directional Index (ADX) has jumped to 27.85, its highest point since September 2, a sign that the sell-off is continuing. Therefore, gold may continue falling, potentially to the support level of $3,750.
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