Gold Heavily Lower As USD Outlook Shifts Higher

Gold Prices Break LowsGold prices have come under fresh, heavy selling pressure on Monday as traders continue to digest the latest outlook from the Fed. With rates now pegged to rise further while also staying at higher levels for longer, the USD outlook has shifted higher. With yields rising, gold prices have seen a sharp drop in sentiment with futures falling around 6% from the September highs. With many players now upgrading their USD forecasts, gold prices look likely to remain under pressure near-term.US Data on DeckLooking ahead this week, the main focus will be on the next set of US employment indicators. Given the Fed’s focus on the surprising resilience of the US economy, if Friday’s data comes in above forecast this will no doubt strengthen the ‘higher for longer’ narrative, keeping USD well supported and sending gold prices further lower. Alongside the headline NFP number, traders will be paying close attention to wages growth.Wages in FocusWith CPI having surged higher in August, any uptick in wages will be taken as a sign that inflationary risks have turned higher again, sending gold prices lower. Alternatively, should we see any surprise undershooting of forecasts in Friday’s data this could well help gold prices recover some ground short-term.Technical ViewsGoldThe reversal lower from the September highs has seen the market breaking back into the bear channel. Price has blown down through the 1905.46 and 1871.04 level supports and, with momentum studies turned bearish, the focus is on a test of the 1805.18 level next, along with the bear channel lows.

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