Gold Prices Face Downward Pressure Amid Global Economic Concerns and US Dollar Strength

Gold prices have been under pressure for the past five days as market bears fight for dominance amid growing concerns about a global economic downturn. This has led to a preference for the safe-haven US Dollar, especially as emerging economies contend with rising interest rates from Western central banks and potential deflationary risks in the Chinese economy.

Additionally, the allure of gold has been diminished by surging US Yields, with 10-year Treasury yields hitting a 16-year peak this month. Speculation about the Federal Reserve potentially reevaluating the US neutral rate has played a role in this shift.

This week, the trajectory of gold will be significantly influenced by speeches from various FED members. Over eight members are scheduled to speak, and two of them have expressed differing views on whether the current data suggests a pause or an early triumph over inflation. Both narratives have had a negative impact on gold.

Notably, global gold ETFs have witnessed a third consecutive month of net outflows in August, and COMEX-managed money's net long positions have dropped to a five-month low. These factors persist in applying downward pressure on gold prices, owing to the current macroeconomic climate that favors yields and the US dollar.

With the US economy displaying increasing resilience, as evident in yesterday's Service PMI, and continued indications of better-than-expected growth from various economic data, gold could face additional downward pressure. This is primarily due to the ongoing strength exhibited by yields and the US dollar, as market participants persist in factoring in the likelihood of prolonged higher interest rates, perhaps even culminating in one final hike later in the year.

Gold continues to correct after touching 1950 with the 100MA on a 4-hour chart. The next support is at the 1910 level, and a breakout below this support level will take the price towards 1900, followed by 1885.