After Volatile Start To The Week, gold has Steadied
Gold had a rocky start to the week, tumbling in early Asian trading on Monday and breaking through the key support level of $1,750. Gold then spent the rest of the day trying to recover from its lows, but still ended the day down 2%.
While the trading environment may have worsened the heavy selling, there’s no doubt that it was more so due to the strong economic data and the U.S. Fed speak that happened late last week. Gold still recovered after the deep crash and then got resistance at that last support level and came down once more, confirming the breakout.
Now It has been stabilised in at $1,725 – $1,745 range and is pretty much sideways in the day. The short-term outlook does not seem to look in favour of the precious metal, especially in light of the strong data coming from the U.S.
If the wait and watch approach is indicated and adopted at Jackson Hole meet, then the yellow metal prices may not go into a deep drop, but rather decline based on the strength of the Job and economic data. The Fed could begin tapering between October to December the $120 billion it has been putting monthly into bonds and mortgage-backed securities to support the COVID affected economy. In this case, product managers should be aware of how this could affect their own industry and be prepared to make decisions accordingly.
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