Gold Susceptible to Further Decline as It Fails to Defend the Monthly Opening Range.

Gold is on track to test the monthly low of 1660 following the series of lower highs and lows. In addition, the US Non-Farm Payrolls (NFP) report further pressures the price of gold as old Treasury yields rise to fresh monthly highs.

The price of gold declined below $1718 following its failure to test the September high of $1735. Moreover, the inability of bullion to defend the opening range for October may cause it to decline further in the coming days.

The developments from the US may keep swaying gold prices because the amendment to the Consumer Price Index (CPI) is expected to reflect the primary rate increasing to 6.5% in September from 6.3% per annum the previous month.

Furthermore, the evidence of continuous price growth may persuade the Federal Reserve to implement a restrictive policy as the Summary of Economic Projections (SEP) predicts a steeper path for US interest rates.

Therefore, the gold price may be unstable ahead of the coming Federal Open Market Committee (FOMC) interest rate decision on November 2. This is because the CME FedWatch Tool shows over 70% probability for another 75bp rate hike causing bullion to reproduce the price action from August as it attempts to hold above the 50-Day SMA of $1718.

Conclusively, the gold price may follow the negative slope in the moving average as it declines in anticipation of the September high of $1735. Bullion may also maintain the rebound from the yearly low of $1615 if it doesn’t defend the opening range for October.