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11/11/24
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Gold Prices Under Pressure: Challenges from U.S. Treasury Yields and China’s Economic Concerns
Gold prices are facing downward pressure early this week, trading below the $2,700 level, as sellers aim to extend a three-week streak of losses. The recent rise in U.S. Treasury bond yields and concerns about China’s economic stability are contributing to the current market dynamics. Despite a pause in the rally of the U.S. Dollar, these factors are adversely affecting gold valuations.
As the U.S. prepares for a critical week of inflation data, gold’s downward trajectory is becoming more apparent. After a recent decline linked to a dovish stance from the Federal Reserve regarding interest rates, yields on U.S. Treasury bonds have rebounded during Asian trading hours. Market participants are disappointed with China’s significant debt relief package and the slow increase in inflation, which have raised doubts about the country’s economic recovery. Given that China is the largest consumer of gold worldwide, these uncertainties are particularly impactful.
In October, China’s Consumer Price Index (CPI) experienced a modest increase of 0.3%, a slowdown compared to the previous month, and it fell short of expectations. Additionally, there are growing concerns about the potential economic ramifications of tariffs that may be imposed by the incoming U.S. administration, further weighing on gold prices amid the current trading environment.
Traders are adjusting their positions ahead of the upcoming U.S. Consumer Price Index (CPI) data scheduled for release. However, the looming Veterans Day holiday in the U.S. may lead to increased volatility in gold prices as trading volumes are expected to thin.
From a technical standpoint, gold prices have breached the $2,673 support level, which corresponds to key Fibonacci retracement levels from a recent price rally. If downward momentum continues, the next significant level for sellers to target will be around $2,641, which is a crucial support confluence based on moving averages and Fibonacci levels. Conversely, for a bullish shift, prices must rise above $2,700 to test higher resistance levels near $2,718.
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