Breaking News
Get 40% Off 0
Is NVDA a 🟢 buy or 🔴 sell? Unlock Now

Gold Near 2-½ Year Low on Overdone Panic Over Rates

Published Sep 15, 2022 02:47PM ET Updated Sep 15, 2022 03:41PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
 
XAU/USD
-0.13%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
Gold
-0.34%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
DX
-0.07%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
US10Y...
-0.54%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

By Barani Krishnan

Investing.com -- In an ideal world, market moves sync perfectly with the news, data and other valuation matrix of an asset. In the real world, of course, there’s a greater chance for things to be overly exuberant or gloomy. Thursday’s selloff in gold was beyond gloom, bordering on utter, ridiculous panic.

On a day when neither the forex nor bond markets did enough to move the needle on gold, bears found it fit to hammer the yellow metal to mid-$1,600 lows seen before the pandemic rally of 2020 that eventually resulted in the all-time highs of above $2,100.

The benchmark gold futures contract on New York’s Comex, December, settled down $31.80, or 1.9%, at $1,677.30 per ounce. The session low was $1,669.05, marking a bottom since June 2020.

Worse was the spot price of bullion, which is more closely followed at times than futures. Spot gold was at $1,665.20, down $32.25, or 1.9%, on the day. The intraday low was $1,660.41. The last time spot gold was lower than that was in April 2020, before it began the turnaround that took it to record highs.

With the tumble over two previous days of trading, both the futures and spot markets were down 3% on the week.

Perplexing to most watchers was the absence of a clear trigger for Thursday's plunge.

The Dollar Index wavered in a piddly band between 109.148 and 109.653 while yields on 10-Year Treasuries moved in just as modest a range of 3.402 - 3.468.

Forex and bonds, in contrast, were in sync with the news of the data, which involved a so-called data dump — comprising weekly U.S. jobless stats, retail sales figures for August and New York Fed manufacturing numbers — ahead of the all-important interest rate decision of the central bank’s Federal Open Market Committee due on Sept. 21.

Weekly filings for U.S. unemployment claims fell for a fifth week in a row, according to Labor Department data on Thursday that showed a healthy labor market able to fuel Americans’ spending even as the Federal Reserve tried to curb it with rate hikes.

But the jobless numbers themselves weren’t staggering. Initial claims for unemployment insurance for the week ended September 10 were 213,000, down 5,000 from a downwardly revised total of 218,000 claims from the prior week, the Labor Department data showed. That was the lowest level for unemployment filings since the week ended May 28.

Ditto with the retail sales figures, which rose 0.3% in August, according to Commerce Department data that suggested tumbling fuel prices had boosted Americans’ ardor for other purchases that kept up inflation and rate hike expectations. Economists had forecast a 0.2% rise.

“Gold got pummeled ruthlessly,” said Ed Moya, analyst at online trading platform OANDA. “If Treasury yields keep going up that will keep the selling pressure on bullion. Gold should find support soon as investors will refrain from any overweight positions until they hear directly from the Fed. “

So, where’s gold likely headed from here?

“In the near term, a further drop to $1650 may be seen,” said Sunil Kumar Dixit, chief technical strategist at SKCharting.com.

He noted that gold was oversold from its Relative Strength Indicator reading of around 30 and stochastics of below 5/10 across the daily, weekly and monthly charts of bullion —- calling for a rebound, respectively, to the $1,686, $1,695 and $1,710 levels.

Gold Near 2-½ Year Low on Overdone Panic Over Rates
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your investing.com profile, will be public on investing.com and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (6)
Alan Rice
Alan Rice Sep 15, 2022 6:31PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Au/Ag = almost 90. (Enough said).
Tony Dunleavy
Tony Dunleavy Sep 15, 2022 4:54PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
just to clarify, below should read an all time high in recent cycle. Wall St have forgotten how hard it will be to reduce inflation, but the Fed have no choice to keep pushing up Interest rates harder and longer than expected. This is good for the $ but very bad for gold and the Stock Market. The falls are only getting started....
Tom Scheuermann
Tom Scheuermann Sep 15, 2022 4:54PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
there will be a time when they have to make a choice as unemployment ticks up. they know that as rate hikes set in unemployment can only go up. the question for me is, what do they care about more? the economy (unemployment) or the dollar.
Tony Dunleavy
Tony Dunleavy Sep 15, 2022 4:54PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
the $, more specifically, inflation. History tells them it will ******the economy versus a 1 year recession,which is preferable
Tony Dunleavy
Tony Dunleavy Sep 15, 2022 4:50PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
rubbish article, It is obvious why gold fell, the only question is why it took a few days to happen. The $ just reached an all time high and gold is mostly inversely related. more $ strength coming so more gold pain coming
Barani Krishnan
Barani Krishnan Sep 15, 2022 4:50PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
The dollar DID NOT reach an "all-time high" (I know you're referring to a 20-year peak and not a record high, and I'll give you a pass on that). But more importantly, here's what you have to tell me: How much did USD or yields rise by today (i.e. over the past 24-48 hours) to justify the 3% drubbing in gold to 2-1/2 year lows. Before you lock horns with me, be prepared with your facts; not RUBBISH that you accuse me of.
Tom Scheuermann
Tom Scheuermann Sep 15, 2022 4:50PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
2 things....obviously the dollar did not hit an all time high, in fact, you can argue it has hit an all time low as a dollar buys less this year than it ever has. number 2, the DXY really has nothing to do with gold, it's a relative comparison to other currencies, not gold. over time it has no reliable correlation...dxy is 110 now and gold is 1670, last time the DXY was 110 it was 20 years ago and gold was $300
SunilKumar Dixit
SunilKumarDixit Sep 15, 2022 4:50PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Tony Dunleavy. Do you always talk innocent like this or is this your first time? Before you call the story rubbish, use your unused brains, ofcourse if you have any, to go and check how much dollar index rise yesterday against yesterday's gold's drop.
Tony Dunleavy
Tony Dunleavy Sep 15, 2022 4:50PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
yes, I corrected that immediately after. Gold is mostly related to the $ except when it becomes a scare resort itself. Follow the 2 of them for the last few years, taking out gold peaks for covid and war, when the $ rises, gold falls
Tony Dunleavy
Tony Dunleavy Sep 15, 2022 4:50PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Barani Krishnan apologies for strong words, but $ has risen strongly for a few weeks, and gold needed to catch up, that's all that happened.
farhad p
farhad p Sep 15, 2022 4:04PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Gold will rebound UpTo 1690 to 1710
Nuno Lou
Nuno Lou Sep 15, 2022 3:07PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Market manipulation is almost daily, just check the huge pump in Eurusd to almost 1.02, 150pips at opening without any news
Mr Miercoles
Mr Miercoles Sep 15, 2022 3:06PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Has anyone every confused this author with an intelligent trader? Bueller?  I didn't think so, using words like panic in a headline.
Show previous replies (2)
Mr Miercoles
Mr Miercoles Sep 15, 2022 3:06PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
SunilKumar Dixit  I can, which I'd posit would be foreign governments selling gold to pay the $25B + increased interest on their US debt since rates have increased in 2022.  The author is too much of a rookie gold analyst to even begin to unravel what's happening globally.  Too inwardly focused on US, which is why I mock his lack of knowledge on this topic.
Tom Scheuermann
Tom Scheuermann Sep 15, 2022 3:06PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
governments are net buyers of golf, not sellers.
Barani Krishnan
Barani Krishnan Sep 15, 2022 3:06PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Mr Miercoles  Ha ha ha ... Are you trying to tell me that each of these sort of outsized gigantic inexplicable moves in gold have solid, scientific thinking behind it? Have you forgotten the c(lowns) who were doing the manipulation of the paper market on Comex; yaa, your JPMorgie and N.Scotia types. You really think there is this much of concerted coordinated effort among CBs to sell gold to pay down debt? You're overthinking it, is all I can say. If it's one thing I've learned from 25 years of reporting these markets is that sometimes the biggest moves occur out of the simplest reasons. In this case, it appears to be risk-off across commodities that just steamballed in gold as one stop after another got taken out.
SunilKumar Dixit
SunilKumarDixit Sep 15, 2022 3:06PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Miercoles. Sssssh ..! Don't say governments sold Gold and prices caved in below long held support. People will laugh at the misplaced notion. On a broader look, governments are net buyers in Gold. Try finding out a more genuine and valid reason for the drop.
SunilKumar Dixit
SunilKumarDixit Sep 15, 2022 3:06PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Miercoles. To update your software, I must tell you the author has spent more than two decades in research on precious metals and energy.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email