Key Takeaways:
Gold held at $4,008.01 an ounce in early Asian trade, entering a medium-term bearish consolidation zone below the key $4,115 Fibonacci retracement level.
"A deeper pullback is possible, with gold bears targeting $3,680 an ounce," Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said in a note.
The $4,115 level represents the 38.2% Fibonacci retracement of the rally from October 2023 through January 2026. Gold is headed for its first quarterly decline since 2024 and its steepest retreat since the second quarter of 2013, with prices down 11.3% in June. U.S. gold futures for August delivery dipped 0.4% to $4,022.70 an ounce. The Federal Reserve's stubbornly high inflation readings have reinforced expectations that interest rates will stay elevated, with traders pricing in about a 65% chance of a rate hike in September, according to the CME FedWatch tool.
"The markets are a little uneasy about how stable the [memorandum of understanding] is and there's pressure on gold because people are not seeing much light at the end of the tunnel," Edward Meir, analyst at Marex, said.
The breakdown below $4,115 opens the door to further selling pressure toward $3,680, a level not seen since November. Still, gold remains attractive for long-term investors as many central banks that sold part of their gold holdings to offset the energy-price surge will eventually need to replenish those reserves, Ozkardeskaya said. An OMFIF survey showed central banks are more likely to cut U.S. dollar exposure over the next decade as heightened geopolitical concerns drive portfolio shifts, while increasing gold holdings in the near term.
Among other precious metals, spot silver slid 0.8% to $58.26 an ounce, headed for its worst quarterly decline since the first quarter of 2020. Platinum dropped 0.7% to $1,564.34 an ounce, while palladium edged up 0.2% to $1,215.94. Both metals were on track to log monthly and quarterly declines.
Investors are now eyeing the ADP employment data due Wednesday and U.S. nonfarm payrolls data due Thursday for further clues on the Fed's monetary policy trajectory.
This article is for informational purposes only and does not constitute investment advice.
