Gold Resists Strong Dollar, Traders Buy Dip Amid Rate Hike Concerns
The US dollar has rallied against a broad basket of currencies as forex traders focus on developments in debt markets, but surprisingly, this hasn't put any pressure on gold prices. The Federal Reserve's James Bullard recently stated that additional rate hikes would be needed to slow inflation, and while he noted that there isn't a clear trend towards returning to the 2% target, it still seems likely that rates will rise in October.
Despite this strong dollar and rising Treasury yields, some traders were ready to buy gold's dip, indicating potential for further upside momentum. However, the probability of a rate hike in October remains high, which may limit gold's gains. A potential pullback in oil markets could provide support for gold prices, as WTI oil declined towards $90.00 and Brent oil settled near $103.00.
From a technical standpoint, gold attempted to settle above the $4180 level but lost momentum and pulled back. If gold settles below this support range of $4160-$4180, it will likely move towards the next support level at $4000-$4020. The Relative Strength Index (RSI) remains in the moderate territory, indicating room for further downside momentum.