Golds downward spiral extends for the 7th consecutive day

Gold prices drop below the $1830 hurdle

By Raed Alkhedr | @raedalkhedr | 3 October 2023

  • The precious metal has incurred significant losses starting from last week.

  • The inflation index has experienced a slower-than-expected increase during August.

Economic events impacting the USD

Gold prices fell for the seventh straight session due to the strengthening of the US dollar against major currencies and commodities. This decline has led to monthly and quarterly losses for gold.

In terms of economic data, the Federal Reserve's preferred inflation index in the United States saw a slower-than-expected increase in August. The US Personal Consumption Expenditures (PCE) index rose by 3.5% on a yearly basis in August, slightly lower than the 3.4% increase in July. On a monthly basis, the PCE index increased by 0.4%, falling short of the expected 0.5% rise.

Looking at the core PCE index, which excludes energy and food costs, it saw a 0.1% monthly increase in August, lower than the anticipated 0.2% rise. On a yearly basis, it increased by 3.9% compared to the same month last year, following a 4.3% rise in July.

Consumer spending in the United States, a significant driver of the economy, grew by 0.4% in August, meeting expectations but at a slower pace than the 0.9% growth recorded in July.

The data plays an important role as investors look for signs of easing inflation and the possibility of the US Federal Reserve considering lower interest rates, especially after the Fed's recent decision to keep interest rates unchanged in its latest meeting.

Markets await several key economic data releases this week, with a particular focus on US labor market data, as well as statements from Jerome Powell, the Chairman of the Federal Reserve.

Prices began the week with a noticeable decline and is currently trading around the $1826.00 per ounce.

Key technical and pivotal levels that may impact gold movements.

Gold experienced a sharp decline, reaching its lowest price today around the $1815.00 level, and approaching the strong support levels at $1810.00. If these support levels are maintained, it may rebound to test the resistance level at $1830.00. A breakthrough of this level could contribute to further upward movement, testing the resistance levels at $1850.00 and $1875.00.

However, if gold drops below the support levels at $1805.00, it may lead to further decline, testing the support level at $1770.00.

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