Gold prices softened as rising US Treasury bond yields strengthened the greenback, making the dollar more attractive to investors.
Prices of the precious yellow metal on Monday declined modestly from $1,800 to $1,760 per ounce.
The White House on Friday announced the lifting of Covid-19 travel restrictions for fully vaccinated foreigners from November 8, which triggered a demand for jet fuel. But gold is certain to move the opposite direction, according to investing.com.
Independent forex portal FXStreet’s editor Guillermo Alcala said on Tuesday: “The increase on US Treasury bonds, fuelled by increasing expectations that Fed tapering is around the corner, has made the US dollar a more attractive refuge for inflation than gold.
“The US 10-year yield has ticked up to 1.57 per cent from 1.55 per cent on Friday, while shorter-term notes, like the five-year yield, surging to 20-month highs at 1.19 per cent as investors start speculating about the possibility of higher interest rates for 2022.”
Investing.com said: “Gold prices are projected to see further weakness after last week’s brief swing that took it above $1,800 – only to collapse within 24 hours. Last week’s minutes of the Fed’s September meeting showed that a November announcement is on the cards and tapering could even start later the same month.”
From a technical perspective, gold prices are being traded in a range of $1,760 to $1,785 – remaining firm above the $1,760 level and indicating that the market is consolidating after the $40 drop last week.
In daily charting, gold prices are moving in a downtrend, so if the price breaks below $1,760, the next drop for gold might be $1,745, an October low point, followed by $1,725, a September low point.
As a result, traders can wait for candlestick analysis confirming the $1,785 resistance zone before placing a sell order, with the take-profit function at $1,765 and the stop-loss at $1,800.