Gold futures futures declined sharply Tuesday and Wednesday, as the Dollar Index ($DXY) is firming and interest rates are rising.
Gold has fallen below $1300 and is currently trading around $1290 per ounce.
The Dollar is rising along with interest rates – The yield on the 10-year note has surged past 3 percent.
The rise in interest rates comes after the release of the latest retail sales data, which came in at 0.3% month over month growth for April, below analyst estimates of 0.4%, but still considered strong. Retail sales for March were revised to 0.8% from 0.6%.
Looking at the chart below, we can see gold falling as the declining phase of its current market cycle comes to a close.
The cycles are represented by semicircles in the chart below and are grouped into a large “harmonic family,” or group of cycles.
Gold Futures (GC) Chart with Daily Bars
Our analysis indicates that this is a capitulation stage, meaning that as the cycle “nest” together, risk increases to the downside, with investors sell emotionally and weak holders get washed out. Our support level was $1302 and the next level is $1288. We believe an important low is pending.
Check out the latest episode of FutureSpeak below, in which we analyze the cycles for gold and 22 other futures contracts.
FutureSpeak – askSlim Special Presentation 05/13/18
Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.