Gold hits 2-months lows, tests $1260
- Metal testing critical support.
- Below $1260 bearish acceleration seems likely.
- Heads for the lowest close since August.
Gold dropped further during the US session and reached $1,260.90, the lowest since early October. The metal remains under pressure near the lows, still holding above $1260.
Yellow metal not shining
The US dollar is rising on Tuesday but it appears not to be the only reason behind gold’s weakens. The metal is falling more significantly than what the USD is rising. If the greenback accelerates to the upside in the currency market, the slid in gold could turn more dramatic, particularly if US yields rise.
The DXY is up modestly, testing at the moment last week highs around 93.35, while gold is at $1262, down 0.90%, losing more than $10, headed toward the lowest close since August. Crude oil prices are posting modest gains on Tuesday while Bitcoin is above $11,000. US bond yields are lower, which usually tends to favor the upside in gold.
A critical support
Gold found support at the $1260 area. That zone also capped the downside back in October. A break lower could clear the way to more losses with a potential target at $1250. The ounce needs to hold on top in order to prevent another leg lower.
The key $1260 could either be the doors to another leg lower or to a rebound. If the metal rises back above $1270 it could remove some short-term pressure but the bearish bias is likely to persist as long as it holds below the 20-day moving average that stands at $1280.