Gold price continues lower for the second consecutive session as investors expect more interest rate hikes from the Fed. Despite a shaky global geopolitical environment which should make gold investments attractive, the global race to higher interest rates pressures the precious metal as it provides no interest. Analysts now expect the Fed Funds rate to reach 4.50% to 4.75% in 2023. The Swiss National Bank (SNB) yesterday raised interest rates by 75 basis points to 0.50% ending seven years of negative interest rates and the Bank of England (BOE) raised interest rates by 50 basis points to 2.25%
Recent economic data from the USA and Europe point to a slowdown in the global economy while the escalation in the Russian – Ukraine after President Putin’s order for a partial mobilization makes things worst.
As of writing gold price is down 0.87% at $1656 the lowest level since April 6, 2020. Gold has lost 9.30% since the beginning of the year. Silver is also under pressure and trades 1.40% lower at $19.35,
Global stocks trade at 24-month lows while the futures on Wall Street today point to a negative start.
Gold Technical Analysis
Gold price moves in bearish territory and every rebound looks like a good selling opportunity as long as the Fed keeps its commitment to higher interest rates. Initial support for the precious metal is at $1652 today’s low. A break below mighty opens the way for a test of the April 6, 2020 lows at $1612.
On the upside, the first resistance for gold stands at $1675 the daily high. A move higher would meet more sellers at $1685 the top from yesterday’s trading session. What can cancel the negative trend is a strong move above the 200-day simple moving average at $1731.
The technical picture points to more pain for gold in the near term. Investors should keep an eye on the Central Banks around the globe as the high-interest rates environment will keep the pressure on precious metals.
Nikolas has been involved in the finance industry for over fifteen years spanning across Europe and USA with a depth of knowledge and experience within many aspects of the financial markets. Nikolas gained several years experience with some of the Europe’s leading Brokers, as equity analyst, and trader managing accounts for both Private and Corporate Investors. He enjoys both the fundamental and technical aspects of trading focusing on stock markets and all FX majors. Currently, Nikolas provides analysis and comments to online financial publications. Educational background in Economics (BSc), and Finance (MSc).