Gold is currently trading near $4,347, positioned at the neckline of a daily head-and-shoulders chart pattern. A confirmed breakdown below this level could lead to a decline of approximately 9.4%, targeting a price point of $3,950. The asset has experienced a weekly loss of nearly 2%, marking its third consecutive week of decline.
Macroeconomic pressures are mounting as the US producer price index rose 5.4% year-over-year, exceeding the 5.3% forecast. This inflation data pushed gold prices below $4,400. Simultaneously, the 10-year Treasury yield reached 4.95%, the highest level since October 2023. Markets currently estimate a 67.1% probability of a Federal Reserve rate hike next week.
Technical analysis indicates that the price previously rallied to a range between $4,750 and $4,800 before retracing. The current head-and-shoulders formation includes a head near $4,720 and shoulders at approximately $4,480 and $4,560. A recovery above $4,560 would invalidate this bearish technical setup.
Physical market demand presents a contrasting trend, with gold ETFs recording inflows of $18 billion in August. These holdings reached a record 4,189 tonnes. Additionally, central banks purchased 288.9 tonnes of gold in the second quarter, representing a 62% annual increase. Brent crude prices have also risen, trading above $105 per barrel.
