Yesterday, the price of gold decreased by -0.67% to settle at 58290 as the 10-year Treasury yield rose to its highest level in 10 months on concerns that U.S. interest rates may continue to rise in the future, which was fueled in part by China’s economic difficulties. The Fed’s minutes revealed that policymakers were split on the issue of whether or not to raise interest rates further, with some pointing to the danger of doing so to the economy.
The Atlanta Federal Reserve’s GDP Now projection model indicated that the U.S. economy is projected to grow at a 5.8% annualized pace in the third quarter, and traders are also keeping an eye on the positive U.S. retail sales numbers that were released earlier today. However, there hasn’t been much of a shift in expectations for U.S. peak rates. Instead, shifts in medium-term rate expectations have been what has caused yields to move.
The other issue that investors were thinking about was China’s economy, where the post-pandemic recovery is stalling due to a number of economic data points and ructions in the real estate market. Precious metals suffered from strong economic data as industrial production rose more than anticipated in July, allaying worries that the sector is fading as a result of increased borrowing costs and giving the FOMC more leeway to tighten policy.
Technically, the market is experiencing new selling as open interest increased by 1.76% to settle at 13729 while prices are down by 391 rupees. Currently, gold is receiving support at 58150, and a move below that level could result in a test of the 58005 levels. Meanwhile, resistance is now likely to be seen at 58565, and a move above could result in a test of the 58835 levels.
