{"id":68001,"date":"2023-10-02T19:13:59","date_gmt":"2023-10-02T23:13:59","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/gold-appears-headed-for-a-death-cross-just-5-months-after-teasing-record-highs\/"},"modified":"2023-10-02T19:14:01","modified_gmt":"2023-10-02T23:14:01","slug":"gold-appears-headed-for-a-death-cross-just-5-months-after-teasing-record-highs","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=68001","title":{"rendered":"Gold appears headed for a \u2018death cross\u2019 just 5 months after teasing record highs"},"content":{"rendered":"
\n

Gold has reached its lowest settlement since March, moving further away from the record-high levels that were within reach just five months ago, with prices headed toward a so-called \u201cdeath cross\u201d that could lead to further declines for the precious metal.<\/p>\n

\u201cGold\u2019s kryptonite is surging Treasury yields and a stronger dollar,\u201d Edward Moya, senior market analyst at OANDA, told MarketWatch. <\/p>\n

\n

\u201cWall Street is having a major reset on where flows are going and that is clearly not gold\u2019s way,\u201d he said. \u201cFixed income is all of sudden attractive and that killed the short-term outlook for gold.\u201d<\/p>\n

December gold futures
\n GC00,
\n -0.23%<\/bg-quote><\/p>\n

GCZ23,
\n -0.23%<\/bg-quote>
\n fell $18.90, or 1%, to settle at $1,847.20 an ounce on Comex Monday. That was the lowest most-active contract finish since March 9, according to Dow Jones Market Data. Prices lost 5.1% in September and 3.3% in the third quarter. <\/p>\n

The last time gold traded at such a low was over six months ago, when the U.S. regional banking crisis triggered an influx of buyers, Alex Kuptsikevich, FxPro\u00a0senior market analyst, said in market commentary Monday. \u201cThen, as now, the pressure on\u00a0gold\u00a0came from rising U.S. government bond yields and a reassessment of expectations for higher long-term interest rates.\u201d \u00a0<\/p>\n

The drop in gold prices followed a rise in early May to $2,055.70, the second-highest settlement on record, and the highest for a most-active contract since Aug. 6, 2020.<\/p>\n

Gold prices now look to be closing in on reaching a \u201cdeath cross\u201d \u2014 a technical term that generally indicates a bearish trend, one that occurs when an investment\u2019s short-term moving average falls below a longer-term moving average. The 50-day moving average for December gold was at $1,948.34, while the 200-day moving average was at $1,982.13 on Monday, FactSet data show.<\/p>\n

<\/p>\n

<\/p>\n

<\/p>\n<\/figure><\/div>\n

The last time the gold market saw a death cross was in July 2022, and that led to four months of declining gold prices, then a very sharp rebound going into 2023, said Brien Lundin, editor of Gold Newsletter. So a death cross \u201ccould signal more softness in gold and postpone the fall rally that many were hoping for.\u201d<\/p>\n

Rising Treasury yields sparked gold\u2019s price dive, he said. Yields have continued to surge not only because investors are finally starting to believe the Federal Reserve\u2019s \u201cdetermination to keep rates higher for longer, but also as the U.S. Treasury is being forced to issue massive amounts of new paper into a market where traditional buyers are reducing their purchases,\u201d said Lundin.<\/p>\n

In Monday dealings, the yield on the 10-year Treasury
\n BX:TMUBMUSD10Y
\n was at 4.674%, up from 4.572% on Friday, after the U.S. government averted a weekend shutdown. <\/p>\n

Gold is in the \u201cdanger zone,\u201d and it will plunge below the $1,800 level if the 10-year Treasury yield rallies above 5%, said OANDA\u2019s Moya. <\/p>\n

He expects gold to \u201chave its moment in the sun when the peak in the [U.S.] dollar is in place.\u201d<\/p>\n

On Monday, the ICE U.S. Dollar index
\n DXY
\n was up 0.6% at 106.87, around the highest levels of the year so far. Strength in the dollar can make dollar-denominated gold more expensive for foreign buyers.<\/p>\n

\u201cA rally towards $2,000 seems unlikely right now\u201d for gold, said Moya.\u00a0However, \u201cupside could eventually target the $1,925 region.\u201d<\/p>\n

Meanwhile, Lundin believes the gold-price decline has been \u201cexacerbated by trend-following traders in gold futures piling on after forcing the price through support.\u201d<\/p>\n

While the price could go even lower under this selling pressure, gold is \u201cextremely oversold at this point,\u201d he said. <\/p>\n

Interest rates this high are \u201cunsustainable,\u201d Lundin said. <\/p>\n

Today\u2019s global economy and financial markets were \u201cbuilt upon a foundation of zeroed interest rates, and you can\u2019t follow that with the steepest and harshest hiking cycle in history without breaking something,\u201d he said. \u201cThe chances of a market event forcing the Fed to pivot are actually higher now than ever before in this hiking cycle.\u201d<\/p>\n

<\/p>\n

<\/p>\n

\n

\n \u201c<\/span> \u201cThe chances of a market event forcing the Fed to pivot are actually higher now than ever before in this hiking cycle. That could come at any time, and that\u2019s where a bet on gold at these oversold levels could pay off handsomely.\u201d \u201d<\/span>\n <\/p>\n


\n \u2014 Brien Lundin, Gold Newsletter<\/span>
\n <\/small><\/p><\/div>\n<\/p><\/div>\n

A Fed pivot could \u201ccome at any time, and that\u2019s where a bet on gold at these oversold levels could pay off handsomely,\u201d said Lundin.<\/p>\n

See: <\/strong>\u2018Eventually something will break\u2019: JPMorgan strategist warns rising bond yields could unleash a \u2018financial accident\u2019<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Gold has reached its lowest settlement since March, moving further away from the record-high levels that were within reach just five months ago, with prices headed toward a so-called \u201cdeath cross\u201d that could lead to further declines for the precious metal. \u201cGold\u2019s kryptonite is surging Treasury yields and a stronger dollar,\u201d Edward Moya, senior market […]<\/p>\n","protected":false},"author":1,"featured_media":13273,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-68001","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-markets","tag-featured","post_format-post-format-gallery"],"yoast_head":"\nGold appears headed for a \u2018death cross\u2019 just 5 months after teasing record highs | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Gold has reached its lowest settlement since March, moving 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