Gold: Downside risks with key supports in focus – OCBC

Christopher Wong at OCBC notes Gold has extended its decline to a seven-week low, pressured by higher Oil prices, firm US Treasury yields and a stronger Dollar. The break below $4,200 has intensified technical selling, with near-term direction tied to Oil and rates. OCBC sees risks skewed to the downside.

Oil and yields drive bearish bias

"Gold extended its decline, falling to a 7-week low as the recent rise in oil prices reinforced inflation concerns and expectations for further Fed tightening. Higher US Treasury yields and a firm USD added to the pressure, while the break below $4,200 likely exacerbated technical selling."

"Softer US data (such as core PCE, NFP) or some easing in yields could help Gold stabilise, while another leg higher in oil and yields would keep downside pressure intact."

"Mild bearish momentum on daily chart intact while RSI fell. Risks remain skewed to the downside."

"Failure to reclaim back above $4,300 – $4,350 (21, 50, 100 DMAs) may see bearish pressure continue. Next support at $4,100, $4,000 and $3,944 (previous low). Resistance at $4,300/50, $4,460 levels."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)