Gold drops to fresh 4-month lows, tests $1240
- Metal rejected from above $1,250 tumbles toward $1,240.
- Gold dropped despite USD steadiness.
The yellow metal accelerated the decline during the US session and recently broke below last week lows and bottomed at $1,240.80/oz, the lowest level since July 20. The slide below last week lows took place during a quiet US session. The greenback rose moderately as US yields moved off daily lows. The 10-year yield is back at 2.38% after falling earlier to 2.355%. The US Dollar Index was flat for the day at 93.80.
Gold was correcting higher and peaked before the American session at $1,251.50. Then it started to move to the downside and accelerated during the last hours. As of writing, it was testing the $1,240 area. The metal was headed toward the fourth slide out of the last five days, about to post the lowest close since July 17.
The bearish momentum eased after Friday’s NFP and now it increased again ahead of the FOMC meeting. Tomorrow PPI numbers will be released and on Wednesday the key event will be the Fed’s decision, with updated projections and a press conference.
Levels to watch
To the upside, now $1,245 is the immediate resistance followed by $1,251 (20 SMA in four hours chart). A consolidation above the last one could remove some short-term bearish pressure. The next strong resistance is seen around the $1,260 area. On the flip side, below $1,240 the next support might lie at $1,236 (Jun 26 low) and $1,228 (Jun 5 & 7 high).