“Gold Prices Drop Below $2,000: Understanding the Current Market Trends and Key Price Levels”

Posted by Parani Krishnan

Investing.com – Is Gold Really Losing Its Attraction After Reaching $2,000? It may be too early to tell, although a move back below the key price mark (at $2.00) might give those who are long on the yellow metal a bit of a scare.

The Comex price in New York was down $29.60, or 1.5%, at $1989.50 by (17:27 GMT). The lowest level for the gold session was $1,982.35. Since reaching its highest level in more than three years at $2,048.60 on April 13, the most active gold contract has lost nearly 3%. For the current week, it is down 0.7%, after last week’s drop of 0.5%.

The index, which reflects physical trading in bullion and is closely followed by some traders, fell $25.90, or 1.3%, to $1,978.91. The session low was $1,971.78. The spot gold price reached 2048.84 on April 13th. For the current week, it is down 1.2%, after last week’s modest decline of 0.2%.

Gold’s decline began this week after rising from the one-year lows recorded last week. The price of gold moves in the opposite direction to the movements of the dollar. Besides, a stronger dollar tends to affect external demand for commodities priced in the currency. Rising Treasury yields are undermining the attractiveness of riskier assets, while also limiting foreign capital inflows into the US.

But the dollar’s relative weakness in the past 24 hours hasn’t helped gold.

However, the impact on gold was fears that the Federal Reserve would agree to its interest rate decision on May 3rd that would raise US interest rates to a peak of 5.25% – versus the pandemic rate of just 0.25%.

“Gold remains volatile heading into the weekend,” said Craig Erlam, an analyst at online trading platform OANDA. “Uncertainty about the path of interest rates, which should become clearer over the next month or two, is driving the indecision we see in gold at the moment.”

While Irlam noted that the rally in Treasury yields has halted the yellow metal’s rally, “it is clear that traders are not in the mood to give up the yellow metal.”

He added, “It seems that dips are being bought and it will be interesting to see if we see the same on this occasion as well.” “The 1940-1960 USD range remains the major support.”

Sunil Kumar Dixit, Chief Technical Strategist at SKCharting.com agreed.

“Sellers are still eyeing the next Fibonacci level at 38.2% in spot gold which will test the $1955 support,” Dixit said. “On the upside, $1,992 is expected as resistance.”