Fed's Hawkish Tone Pushes Gold Lower: What’s Next?

Gold prices showed a minor pullback of more than $50 after a massive sell-off. It hits a high of $2,593.

The retail sales report for October showed a rise of 0.4% compared to the previous month, which is a little better than the expected 0.3%. This comes after the September sales were revised up to a 0.8% increase, showing a stronger performance than initially thought.

Recent hawkish comments from the U.S. Federal Reserve have influenced gold prices, reflecting concerns over potential changes in monetary policy. Fed officials, including Chair Jerome Powell, have signaled a cautious stance on interest rate cuts, focusing on economic growth and managing inflation toward the 2% target. This outlook suggests that the Fed may delay lowering rates, which supports the U.S. dollar and tends to decrease gold prices. As a result, gold has faced downward pressure, as rising interest rates make interest-bearing investments more attractive compared to non-yielding assets like gold.

Technical Outlook for Gold Prices

Currently, gold prices are situated below both short-term and long-term moving averages on the 4-hour chart, indicating a bearish trend. Immediate support appears at $2,550; if prices fall below this level, they could target further declines to $2,535, $2,500, and possibly $2,470. On the upside, minor resistance is noted at $2,620, and breaking through this barrier could lead to upward movement toward $2,635,2,665, or even $2,700. Given the bearish indicators, a strategy of selling on rallies around $2,588-90 is recommended, with a stop-loss set at $2,610 and a target price of $2,475.