Gold prices dipped to their lowest level since September 20th today, marking the largest correction of the year.
The correction, which began on October 31st, has already amounted to approximately 7% or $200 per ounce. The decline is linked to the so-called "Trump Trade," characterized by a strengthening US dollar and rising yields. Expectations of higher inflation under Trump's policies could push the neutral interest rate higher than initially anticipated. Given the prospect of rate cuts to 3.75% by the end of next year and assuming a risk premium on bonds, yields may not decline significantly with further rate cuts.
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Open account Try demo Download mobile app Download mobile app10-year Treasury yields have reached 4.4%. Source: XTB.
Gold is currently experiencing its most significant correction of the year, exceeding $200 per ounce. The price is now testing the $2,600 level, which coincides with the 38.2% Fibonacci retracement of the last major uptrend. The next significant support level lies at $2550, which aligns with the 50% Fibonacci retracement. Between $2550 and $2600 we can notice the rising trendline drawn on this year's lows and the 100-period moving average. Seasonality suggests a potential rebound at turn of November and December.
Source: xStation5
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