Gold suffered its worst day in weeks on Monday, plunging 3% to $4,155.84 as bets on another Federal Reserve rate hike crushed precious metals. Spot prices broke below the $4,262 support level in early trading and kept sliding, down from $4,285 on Sunday night, FXEmpire data showed.
Silver fared even worse, tumbling 4.75% to slip below $62 as the metals selloff deepened ahead of a busy week of US economic data - a sharp reversal from Sunday's steady $4,285 hold.
Hike bets, a strong dollar and 5% yields
The trigger is the Fed's hawkish turn. After September's rate increase to 4.00%, markets now price a 66% chance of another hike in October, raising the opportunity cost of holding non-yielding gold, RoboForex reported.
A strong US dollar, 10-year Treasury yields near 5% and high oil prices piled on the pressure. Gold now sits roughly 26% below its all-time high of $5,602, reached on Jan. 29, with traders Gripped by expectations of further tightening after strong US business activity data.
Chart damage points to $4,155, then $4,055
Technically, gold looks battered. Prices remain inside a descending channel after printing a Harami reversal near the upper Bollinger Band, with the next downside target at $4,155 support and $4,055 beyond it. Resistance sits at $4,249 and $4,320, per LiteFinance, which had spot at $4,146.98 on Monday.
Retail positioning agrees it is a falling knife for now: TradingView traders are split between selling retests of broken $4,332-4,340 support and bottom-fishing a crowded $4,320-4,300 zone.
The cushion: record ETF demand and data week
The selloff has a floor forming underneath it. The World Gold Council says global gold ETFs pulled in $18 billion in August, lifting total holdings by 121 tonnes to a record 4,189 tonnes - evidence that long-term investor demand is holding despite the rate shock.
What comes next hinges on this week's US data deluge: ADP employment, PCE inflation and Nonfarm Payrolls could all reshape October hike odds - and with them, gold's $4,155 line in the sand.