Last week’s meltdown continues into the start of this week, as the precious yellow metal crushes the $1,748 support and hits an intraday low of $1,742 (as of writing).
Last week, prices slumped $50 at one point in Thursday’s session to a five-week bottom of $1,744.
For the week, spot gold has fallen -3.5%, its most since seen since last recorded in late July.
The meltdown in spot gold came as its rival, the US Dollar, surged on economic data showing an unexpected bump in U.S. retail sales gained +0.7% in August, after expecting a -0.7% month-over-month decline, with the previous release at -1.8%.
The US Dollar index (US DXY), which measures the greenback strength against a basket of six leading peers, managed to close above the key 92.85 level/resistance, which has now exposed the region of 93.60, with the scope of challenging the 94.40.
Reassess from there, with 95.20-60 located above (broad target).
The highlight of the week looks to the U.S. Federal Open Markets Committee’s (FOMC) when they begin their two-day policy meeting Tuesday ahead of its policy announcement on Wednesday afternoon (Thursday 4 am Sydney time).
Eyes will be on what U.S. Fed Chair Jerome Powell says at a post-meeting news conference Wednesday, especially concerning inflation, economic growth, interest rates and when the Fed will likely start reducing its purchases of government bonds.
Viewing the technical aspect, the Relative Strength Index (RSI) 3-daily ‘lookback’ indicator holds a negative signal but oversold, while the Moving Average Convergence Divergence (MACD) is married to the RSI, in terms of strengthening the negative signals.
With the bearish challenges reached, in terms of their objectives at $1,770-74 and $1,748, it now leaves a neutral view in the short term.
However, one takeaway is a close beneath $1,748 would expose a $1,726-28 region (potential target).