Gold is having a rough week. Futures dropped to $4,321.80 an ounce on Monday, extending a sell-off that saw the metal post its biggest one-day decline since March on Friday—a 3% plunge. The weekly loss of 4.9% was the steepest since the week ended March 20, according to MarketWatch data.
The culprit? A stronger-than-expected jobs report that's reshaping rate expectations. Bart Melek noted on CNBC that the robust payroll data is increasing gold's cost of carry, which could weigh on the metal's appeal. When rates rise, holding non-yielding assets like gold becomes more expensive relative to interest-bearing alternatives.
Ed Yardeni, founder of Yardeni Research, pointed out that gold dipped below its 200-day moving average of $4,443.4 per ounce on Friday—a key technical level that traders watch closely. "We reckon the next support is at $4,000," Yardeni told clients in a Sunday note. But here's the twist: he's not giving up on his bullish outlook. Yardeni expects gold's rally to resume once the Iran conflict ends, forecasting prices to reach $5,500 by year-end and $10,000 by the end of the decade.
Ole Hansen, head of commodities strategy at Saxo Bank, shares Yardeni's view that the technical picture has become more challenging. He noted that the recent bullish behavior of investors, combined with a sharp reduction in bearish stances, has left gold "increasingly vulnerable to a technical setback once key support levels gave way."
The sell-off seems to contradict gold's reputation as a safe haven during geopolitical turmoil, like the ongoing Iran conflict. But the metal's dip below its 200-day moving average—typically a bearish signal—has put traders on alert. However, history offers a different perspective: the last 10 times gold fell below that moving average, short-term weakness was often followed by stronger long-term performance, suggesting this could be a buying opportunity.
On a year-to-date basis, gold-related ETFs have taken a hit: SPDR Gold Shares (GLD) fell 0.51%, iShares Gold Trust (IAU) dropped 0.42%, and VanEck Gold Miners ETF (GDX) tumbled 8.04%.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by MarketDash editors.
Image via Shutterstock
