Gold Falls $20 From New Highs, After Gradual FED Cuts Comments

Gold continued to climb higher today, printing a new record high at $2,740,56, where it made a swift reversal, losing $20 after balanced comments from FOMC member Logan, who implied that the FED would take it slow with rate cuts. Gold dipped lower and met the 20 SMA for the first time since Thursday, so let’s see if this moving average will hold as support.

As US 10-year Treasury yields rise by 9 basis points to 4.15%, the highest level since late July, the US dollar has gained renewed strength. The dollar is trading at its best levels of the day, supported by the uptick in bond yields, with EUR/USD heading down toward 1.0810 which was the low last week.

Gold Chart H1 – US 10-Year Rates Keeping the US Dollar Bullish

The USD/JPY pair has surged by about 1 cent, rising back above the 150 mark. If it surpasses last week’s high, it will reach its best level since late July. Meanwhile, traditional safe havens like gold, silver, the Japanese yen, and the Swiss franc are all under pressure.

Boston Fed President Logan highlights the need for a flexible approach to monetary policy, while noting a strong economy, potential risks to jobs and inflation, and the importance of financial conditions in shaping future decisions.

Comments from the Boston Fed President Logan:

• Boston Fed President Logan emphasizes the need for nimbleness in monetary policy decisions.
• Describes the economy as strong and stable.
• Anticipates gradual rate cuts if economic forecasts are met.
• Cites downside risks to the job market and ongoing risks to achieving the inflation goal.
• Notes that balance sheet cuts and rate reductions are working together.
• Liquidity remains abundant in money markets.
• Aims for “negligible” balances in the reverse repo facility over time.
• Fed may adjust reverse repo rate if cash remains in the facility.
• Business contacts remain optimistic but are aware of potential risks.
• Pays close attention to financial conditions indexes.

GOLD is seeing renewed interest from investors due to ongoing political instability, including conflicts in the Middle East, uncertainty over the upcoming U.S. presidential election between Donald Trump and Kamala Harris, and economic downturns in China and Europe. However, XAU/USD has dropped more than $20, breaking below $2,720 and breaching the 20-day Simple Moving Average (SMA) on the H1 chart, signaling the potential for further declines.

Conclusion
Rising U.S. yields have bolstered the dollar, pressuring safe havens like gold and yen. However, global political uncertainty and economic risks may keep gold in demand as a safe-haven asset, despite short-term price retreats.

Gold Live Chart