The gold price has continued to fall in today’s trading session after yesterday’s surprise announcement from the US Federal Reserve that a rate hike in December was a distinct possibility which left investors exiting most assets, including gold and moving into the US dollar.
Gold remained well supported in recent weeks as talk of military conflict grew between the US and North Korea and expectations that the Fed would hold off raising rates any further this year.
Fed President Janet Yellen in her following speech after the rate decision noted that the US economy is in good shape and a case for higher rates is justified.
“The Fed’s monetary policy update sees investors flee from the non-yielding asset,” said analysts at Accendo Markets.
“The resultant stronger U.S. dollar puts a further dent into sentiment, increasing the relative price of the precious metal. While off overnight lows of $1,296 courtesy of 5-month intersecting support, overnight falling highs are continuing to pressure gold,” they added.
Gold is now at a key technical support level, which is the double top that was formed in April and June. If the precious metal does manage to break down through this level it should find support at the $1.283 level although there is a risk that this may fail to hold.