During the Asian session, the gold price (XAUUSD) breached the important support level of $1,770.00, precipitating a sharp decline. The precious metal has fallen to roughly $1,763.00 as investors become risk-averse following North Korea’s warning that the United States will face savage military activities in response to its regional joint drills.
As reported by Reuters, North Korea’s foreign minister, Choe Son Hui, lambasted a recent trilateral summit between the United States, South Korea, and Japan, at which the leaders criticized Pyongyang’s missile tests and offered increased security cooperation. This has increased the potential for geopolitical hostilities, which has boosted the desirability of safe-haven assets.
As investors’ risk appetite has decreased, the whole bounce seen in S&P500 futures in Asia has now waned. In the meantime, 10-year US Treasury yields have risen to 3.72 percent after San Francisco Fed President Mary Daly raised the central bank’s interest rate outlook. Fed policymakers have deemed a range of 4.75 percent to 5.25 percent to be a suitable endpoint for the policy rate. She went on to say that the central bank desires a slowdown in the economy in order to moderate the red-hot inflation.
The gold price has broken to the downside from a Rising Wedge chart pattern, indicating waning upside momentum. Around $1,772.90, the 20-period and 50-period Exponential Moving Averages (EMAs) are about to execute a bearish crossover. Meanwhile, the Relative Strength Index (RSI) (14) has moved into the negative zone of 20.00-40.00, indicating that the asset is likely to decline further.
