Gold Slides As Dollar Moves Higher

Key Insights

• Stronger dollar and higher Treasury yields pushed gold below the 50 EMA. 
• Gold may face a wave of profit-taking if it does not settle back above the 50 EMA. 
• The next significant support level for gold is located at the 20 EMA at $1690.

Gold Is Under Pressure Ahead Of The Weekend

Gold settled below the 50 EMA at $1715 and is slowly moving towards the $1700 level as the U.S. dollar continues to gain ground against a broad basket of currencies. Treasury yields are also moving higher, which is bearish for precious metals.

From a big picture point of view, gold faces a serious test. The recent rally pushed gold from $1615 to $1730, so there are many traders who have unrealized profits. These traders will be evaluating whether gold is able to settle above the 50 EMA in the near term. In this case, gold will have a great chance to continue its rebound.

If gold fails to settle above the 50 EMA, these traders may want to take more profits off the table as rising dollar and higher yields present a serious threat to precious metals.

At this point, there is no safe-haven demand for gold. Traders who decided to move away from riskier assets buy the U.S. dollar. Thus, gold has little chances to continue its rebound if the U.S. dollar keeps moving higher.

Gold Settled Below The 50 EMA

Gold declined below the 50 EMA, which is a bearish sign. RSI is in the moderate territory, and there is plenty of room to gain additional downside momentum. The next support level for gold is located at the 20 EMA at $1690.

If gold declines below the $1690 level, it will move towards the next support at $1675. A successful test of the support at $1675 will push gold towards the support at $1660.

On the upside, the 50 EMA will serve as the first resistance level for gold. In case gold climbs back above the 50 EMA, it will settle in the $1715 – $1730 range. A move above the $1730 level will open the way to the test of the resistance at $1750. If gold settles above $1750, it will move towards the next resistance level at $1765.

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