Which US presidential candidate does gold prefer?
Gold loves chaos and should be hitting new highs, especially with inflation coming down and with it, two rate cuts likely before year’s end.
Gold prices fell to a fresh three-week low Tuesday in early US trading as the Federal Reserve readies to begin a two-day policy meeting in which its policymaking committee is largely expected to hold interest rates steady.
Spot gold hit $1,251.88 an ounce in early trading, the lowest since April 10, while June Comex gold was last down $0.90 an ounce at $1,254.60.
It’s been a rough set of trading sessions for the yellow metal, with gold ending last week at $1,268, a full $21 lower than the previous week – partially pressured by a stronger US dollar and a tax plan by Donald Trump that included a 15% corporate tax reduction.
But the most telling sign of a gold retrenchment is the activity in ETFs, which have registered record outflows.
“Gold bulls have succumbed to selling pressure by losing the battle to defend the $1,260 support. While the metal could still be supported by risk aversion in the medium to longer term, the break below $1,260 may entice sellers to send prices toward $1,240,” Lukman Otunuga, research analyst at FXTM Research, told MarketWatch Tuesday.
Courtesy of Kitco Live Charts.
Analysts believe gold seems poised for a fresh bearish break down below the key 200-day moving average indicator, as investors will closely watch for clues on the pace of future interest-rate hikes and for the central bank’s outlook on the US economy in the upcoming Fed’s two-day monetary-policy meeting that kicks off Wednesday.
