Gold prices seesawed on Thursday, affected by overall market volatility. Gold struggled to hold on to its gains, as its price had been on the rise since early last week. Gold fluctuated around the $1,715 per ounce level on Thursday, exhibiting low volatility. If gold prices decline, support may be found at $1,681 per ounce and further down at the 2020 low near $1,441 per ounce. Resistance may be found around 1,740 per ounce and higher up at $1,765 per ounce.
The dollar edged higher on Thursday and the dollar index climbed back above the 112-level, putting pressure on competing assets, such as gold. US Treasury yields also rose, with the US 10-year bond yielding above 3.8%.
Market sentiment has been uncertain in the past few weeks, causing volatility in the gold price. Renewed risk sentiment this week has driven the dollar down. Continued hawkish Fed policy, however, is boosting dollar prices again threatening to drive gold prices down.
Gold prices are under pressure by the shift of most major Central Banks towards a tighter monetary policy to combat rising inflation rates. Assets yielding interest become a more appealing investment compared to gold as interest rates rise. In its latest monetary policy meeting, the US Fed raised its interest rate by 75 basis points. Rampant US inflation has raised expectations for another steep rate hike at the Fed’s next policy meeting in November, putting pressure on gold prices.
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