Gold Decreases Nearly 1 Percent, Approaching the 200-Day Moving Average

Technical Analysis of Gold 

With today's price decrease, prices have fallen for the second consecutive month. Technically, the fact that gold touched and temporarily went below its 200-day moving average increases the likelihood that gold's long-term market sentiment is neutral to negative.

Gold for August delivery is trading at today's low of $1837.60 per ounce, and the 200-day moving average is now $1846.90 per ounce. The price of gold reached a low of $1792.80 two weeks ago before rising and trading above the 200-day moving average last week. Today, gold began at $1856.50 and moved as high as $1867.90 before breaking intraday below the generally acknowledged long-term market mood indicator (200-day moving average).

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President Biden Meets with Chairman Powell and Treasury Secretary Yellen

Today, the President of the United States met with Jerome Powell and Janet Yellen. This is their first meeting since the Senate approved Chairman Powell for a second term earlier this month. Before the meeting, President Biden gave a brief statement saying the meeting's purpose was to "discuss my number one priority, which is tackling inflation."

The natural topic of discussion was the sky-high rate of inflation. With inflation remaining at levels not seen in almost four decades.

"The purpose of my meeting with the Chairman and Secretary Yellen today is to discuss my top goal, which is managing inflation in order to move from the unprecedented economic recovery to a stable growth that benefits American households. And my approach to combat inflation begins with a simple proposition: "Respect the Fed and the Fed's independence, as I have done and will continue to do."

Director of the White House National Economic Council Brian Deese described it as "very constructive." He added, "We have run this first leg of the race at a very rapid pace, which has placed us in a strong position relative to our peers, but this is a marathon, and we must move and shift to stable resilient growth." We can effectively combat inflation without sacrificing any of these (labor market) benefits."

Policy, Yields, the Dollar and Gold

The Federal Reserve's monetary policy has contributed to increased yields on U.S. Treasuries and the strength of the currency. These factors have exerted downward pressure on gold over the past two months. While greater levels of inflation are normally associated with optimistic market sentiment for gold, higher interest rates and a stronger currency have the reverse impact. Consequently, market participants have observed the pendulum swing from optimistic market sentiment in gold to bearish market sentiment when interest rates and the dollar soared.