gold futures (GC)

Gold (GC) Futures: US Dollar Remains the Preferred Safe Haven

  • Gold demand is going down as it gets more expensive for overseas buyers.
  • Gold futures might only turn bullish if the Federal Reserve succeeds in controlling inflation.
  • Gold futures are trading near September 2021 lows on the charts.

Today’s price outlook for gold (GC) futures remains bearish as the dollar strength continues to hurt the yellow metal. The US dollar has become the favorite instrument for investors worried about a possible recession. For this reason, bullion has become more expensive for overseas buyers, lowering demand.

Gold is also suffering from downward pressure as the yellow metal offers no interest. On the other hand, the dollar offers increasing yields for investors as interest rates go up and is, therefore, more profitable.

“The hawkish Fed minutes, which suggested an ‘even more restrictive stance,’ provided no relief for metals markets,” said Tai Wong, an independent metals trader based in New York.

“While a short-covering rally is possible if payrolls are soft, a lasting upturn (for gold) will require a softer U.S. CPI reading next week. That’s needed to pull the Fed back from launching another massive tightening volley,” Wong added.

Commodity prices are falling across the board, fueled by growing recession fears as central banks get tougher on inflation. The Federal Reserve is at the front with its latest 75 bps rate hike and another rate hike looming.

Investors are waiting to hear from ECB President Lagarde on the bank’s stand on a tighter monetary policy. They will also be paying attention to the US jobs report coming out later today that will show whether rising interest rates are hurting the labor market.

Gold (GC) futures technical price analysis:

Gold futures (GC) 4-hour chart
Gold futures (GC) 4-hour chart

Looking at the 4-hour chart, we see gold prices trading well below the 30-SMA showing bears are in full control. The RSI also supports bearish momentum, given that it’s trading below 50. The price is currently moving sideways, indicating that the bears have taken a breather a bit.

At this point, bulls might come in to push the price back to the 30-SMA, which has acted as resistance before the bearish move continues. However, bears may continue without pulling back, with the next support at 1721.9. 1721.9 is a crucial level as it acted as support back in 2021 on September 29th. The directional bias for Gold will remain bearish if the price keeps trading below the 30-SMA and the RSI stays below 50.