Gold is to continue its recent fall, with the price looking set to break the June low of $1,893.12 per ounce.
After reaching around $2,081 per ounce in May, the haven asset has been weakening gradually, with US sales growth data for July the latest factor sapping its strength.
Although the Empire State Manufacturing Index dropped below zero – normally seen as bearish for the dollar – the Core Retail Sales and Retail Sales figures caused the greenback to soar.
Released late on Tuesday Cambodian time, July data revealed that Core Retail Sales increased to 1.0 per cent, 0.8 higher than the previous month, while Retail Sales gained 0.4 per cent on June, Forex Factory reported.
The trend would see gold continue in a downward daily movement from a strengthening greenback while there were US economic fundamentals supporting the currency.
“Gold prices stalled on Wednesday, a day after breaching the key $1,900 support level for the first time in one and a half months as US Treasury yields were boosted on expectations the Federal Reserve is not yet finished with its rapid monetary tightening cycle.
“Gold on Tuesday dropped to as low as $1,895.50 per ounce, its weakest level since end-June, as benchmark 10-year US Treasury yields hit an almost 10-month high, making them more attractive than non-interest bearing bullion,” Reuters reported on Wednesday.
On US July retail figures, the London-based news agency on Tuesday said: “US retail sales increased more than expected in July, suggesting the economy continued to expand early in the third quarter while keeping a recession at bay.”
Technically, based on the Technical Confluence indicator with a four-hour formation, the price of the yellow precious metal stayed well below the key resistance of $1,925 per ounce.
Furthermore, the clear downside break of $1,918 per ounce in the monthly timeframe kept bears hopeful of the price dropping below June’s low.
For this week’s trading recommendation, for a safe market entry, investors should wait to see whether gold is going to break June’s low price of $1,893.12 per ounce, and if so, following the trend is advised.
