Gold at $1,900: How Long Will ‘King Dollar’ Allow It?

investing.com:

A partial U.S. government shutdown seems to be looming and global economic ructions are being heard again, but gold isn’t catching the usual safe-haven bid because ‘King Dollar’ isn’t allowing it.

Since returning to $1,900 an ounce on Aug 21, the spot price of gold, which is more closely followed than futures by some traders, reached a one-month high of $1,953 on Sept 1, clinging to that support. 

At the time of writing, though, that adventure may be over, with bullion, or XAU, hovering at just below $1,900 after dipping beneath that support on the previous occasion.

Whether gold gets to go back to where it was — or sink further to the lows of mid $1,800 or below — will depend largely on what the dollar does. 

Spot gold hit a session low of $1,896.61 at the time of writing, as the resurgent dollar and Treasury yields brought their full weight to bear on bullion.

“A move below $1,900 could be a very bearish move, at which point the August lows would be very interesting not too far away,” said Craig Erlam, analyst at online trading platform OANDA. “Of course, we could simply see further consolidation and we have seen some support today around $1,900 but it's certainly looking vulnerable.”

Spot gold fell to as low as $1,884.35 in August.

Yields, benchmarked to the U.S. 10-year note, shot to fresh 16-year highs on Tuesday, reaching peaks not seen since July 2007. Meanwhile, the Dollar Index got to highs not visited since November 2022. 

The two alternatives to gold surged since the Federal Reserve last week projected another quarter-percentage point rate increase by the year-end, despite leaving rates unchanged for September at a policy meeting on Wednesday.

Fed Chair Powell told a news conference last week that