Gold futures edged higher in early trade Thursday, steadying after feeling pressure the previous session in response to rising Treasury yields.
Price action
-
Gold for August delivery
GC00,
+0.15% GCQ23,
+0.15%
rose $1.60, or 0.1%, to $1,960 an ounce on Comex. -
July silver
SIN23,
+1.24%
was up 26.6 cents, or 1.1%, at $23.795 an ounce. -
July platinum
PLN23,
-0.39%
fell 0.6% to $1,018.80 an ounce, while September palladium
PAU23,
-0.89%
was down 1% at $1,373.50 an ounce. -
July copper
HGN23,
-0.21%
fell 0.2% to $3.747 a pound.
Market drivers
The Federal Reserve is expected to hold its policy interest rate steady when it meets next week, pausing after a series of rate hikes that have taken the fed-funds rate from near zero to 5% to 5.25% since March 2022. However, expectations that a pause won’t be for long lifted Treasury yields on Wednesday, putting pressure on gold. Higher Treasury yields raise the opportunity cost of holding non-yielding assets.
A rate rise by the Bank of Canada on Wednesday, ending a lengthy pause, underscored fears that U.S. rates may still have room to rise in the face of stubborn inflation, analysts said.
Read: Why U.S. stock-market investors were rattled by the Bank of Canada’s surprise rate hike
Gold is trading near the 100-day moving average around the $1,940 level. Losses could accelerate if that’s violated, said Ipek Ozkardeskaya, senior analyst at Swissquote Bank, in a note.
“The next reasonable target for gold bears is $1905, the major 38.2% Fibonacci retracement on November to May rally, and which should distinguish between the actual positive medium term trend, and a bearish reversal,” she said.
Many technical analysts pay attention to what’s known as the Fibonacci ratio, attributed to a 13th century Italian mathematician known as Leonardo “Fibonacci” of Pisa. Technical analysts see key retracement targets for a rally from a significant low to a significant peak at 38.2%, 50% and 61.8%, while retracements of 23.6% and 76.4% are seen as secondary targets.
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