Gold plunged to a nearly two-week low of $4,115 per ounce during Tuesday trading hours, extending losses that began in the Asian session. The precious metal is under pressure from a surging US Dollar, which continues to strengthen amid rising expectations that the Federal Reserve will maintain its hawkish stance on interest rates. Despite recent positive developments in US-Iran peace negotiations, market participants remain skeptical about reaching a final agreement, limiting any safe-haven demand for gold.
The combination of a bullish dollar and Fed rate hike bets is creating a particularly challenging environment for gold traders. Higher interest rates typically diminish gold’s appeal since the non-yielding asset becomes less competitive against interest-bearing alternatives. The break below key technical levels suggests further downside vulnerability in the near term.
FXnCO Insight
Traders should monitor the $4,100 support level closely, as a decisive break could accelerate selling pressure and present short opportunities, while any Fed commentary signaling a pause could trigger sharp reversals.
Source: FXStreet