- Gold futures fell on Monday to their lowest levels since early August.
- The loss comes despite a mixed session for stocks and a declining U.S. dollar.
- Federal Reserve Chairman Jerome Powell will testify before Congress on Wednesday and Thursday.
The price of gold declined on Monday, as technical traders piled increased their short positions following last week’s brutal selloff.
Gold Extends Slide; Silver Follows
Futures on December gold deliveries fell to a session low of $1,448.90 a troy ounce, putting bullion on track for its worst settlement in nearly three-and-a-half months. The most actively traded futures contract was last down $5.70, or 0.4%, at $1,457.20 a troy ounce on the Comex division of the New York Mercantile Exchange.
Bullion is down in five of the last seven trading sessions; over that stretch, it has declined 3.8%.
Silver futures were also under pressure at the start of the week; the December contract was off by as much as 1.1%. The contract was last down 2 cents, or 01%, at $16.80 a troy ounce.
Gold was off by as much as 0.9% on Monday after chart-based sellers entered the futures market following last week’s massive selloff. As Kitco reports, gold’s biggest weekly slide in three years invited a wave of bearish traders into the market. Combined, they likely pushed prices “into pre-placed sell stop orders that were triggered when prices fell below last week’s low.”
In another article, Kitco describes $1,450 as gold’s immediate price floor. Any sustained drop below this level could ignite a fresh wave of selling, further undermining gold’s impressive rally this year.
Bullion peaked closer to $1,570 in early September, having gained almost 23% for the year. From its peak, the price has declined roughly 7%.
Despite the recent reversal, gold’s fundamental value likely remains strong due to global growth worries, declining bond yields and central-bank stimulus.
Economic Data, Fed Testimony in the Spotlight
The commodity markets will be keeping tabs of economic data throughout the week, as there are several reports that could influence investor behavior.
Action begins on Wednesday when the Labor Department reports on consumer inflation. The consumer price index (CPI) is forecast to rise 0.3% in October after flat-lining the month before. Compared with a year ago, CPI is forecast to come in at 1.7%.
Federal Reserve Chairman Jerome Powell will testify before Congress on Wednesday. In a hearing before the Joint Economic Committee, the Fed chief will discuss monetary policy and the economy in light of three successive rate cuts by the U.S. central bank.
Powell’s testimony will continue on Thursday – a session that features a steady stream of economic data including Chinese industrial production, Eurozone GDP and U.S. producer inflation.
On Friday, the Department of Commerce will report on retail sales for the month of October. Separately, the Federal Reserve will release its monthly report on industrial production.