A stronger dollar and higher yields have sent gold bugs reeling since the end of last week and the pressure is continuing today. The drop today now sees price run into yet another test of the 100-day moving average (red line), where we did see a bounce a week ago.
It's not a good look to have seen the rebound last week so quickly invalidated. But from a technical perspective, buyers are still hanging in there at least.
The key support pointed out above will act alongside the 50.0 Fib retracement level of the swing higher since March, seen at around $1,935. That will be an important region for sellers to try and break through in order to push the next downside leg towards $1,900.
For now, traders are quite convinced that the Fed can stick with its narrative of keeping rates higher for longer. And as long as the conviction for a Fed pivot remains low, that should keep gold bugs at bay until the situation switches up.
I'm still an advocate for buying the dip on gold in the long-term but you have to pick your levels. And this is perhaps one of the first few key tests of that conviction. I'd be more inclined on a further dip below $1,900 though, as that will really make an attractive proposition once the tide turns - which it should eventually, possibly in Q3 this year.
