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Gold’s plunge to the lowest in more than two years has left it vulnerable ahead of a Federal Reserve meeting that will be pivotal for the metal.
Bullion had hovered above $1
700 an ounce for most of September but plummeted on Thursday after breaking through a technical support that’s held since 2020. US data pointed to robust retail sales and a strong labor market, raising expectations of more aggressive action by the Fed as it tries to cool inflation.
"We are below the crucial support area,” said Georgette Boele, an analyst at ABN Amro Bank NV. “If it breaks then the next level is $1600 an ounce.”
The metal extended its slide by as much as 0.7% on Friday as the dollar closed in on a record. All eyes are now on the Fed’s meeting next week, where most economists see the central bank raising interest rates 75 basis points.
But there’s a risk the hike could be even larger after US inflation data dashed hopes price pressures may be moderating. That could be a pivotal for gold, which is still holding up relatively well amid the recent surge in bond yields and the dollar.
There is some anxiety about a repeat of the 2013 crash, when prices dropped 14% in two days after the Fed said it would slowdown its quantitative easing. That was matched by a similar surge in Treasury yields and the greenback.
Bullion had hovered above $1
700 an ounce for most of September but plummeted on Thursday after breaking through a technical support that’s held since 2020. US data pointed to robust retail sales and a strong labor market, raising expectations of more aggressive action by the Fed as it tries to cool inflation.
"We are below the crucial support area,” said Georgette Boele, an analyst at ABN Amro Bank NV. “If it breaks then the next level is $1600 an ounce.”
The metal extended its slide by as much as 0.7% on Friday as the dollar closed in on a record. All eyes are now on the Fed’s meeting next week, where most economists see the central bank raising interest rates 75 basis points.
But there’s a risk the hike could be even larger after US inflation data dashed hopes price pressures may be moderating. That could be a pivotal for gold, which is still holding up relatively well amid the recent surge in bond yields and the dollar.
There is some anxiety about a repeat of the 2013 crash, when prices dropped 14% in two days after the Fed said it would slowdown its quantitative easing. That was matched by a similar surge in Treasury yields and the greenback.
