Gold prices test critical support following Fitch downgrade

Analysts note that the US dollar and bond yields have benefited from the safe-haven flow, which has kept gold prices steady. The 10-year bond yield has risen above 4%, and the US dollar index is trading at its highest level in four weeks, at 102 points.

In light of these headwinds, gold prices have dropped to a three-week low and are testing a key support level. December gold futures last traded at $1,973, down 0.29%. However, some analysts point out that gold continues to outperform the stock market, with the S&P 500 index falling over 1% on Wednesday.

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Rising risk aversion sentiment in the marketplace is not providing much support for gold as investors continue to react to Fitch Rating's announcement, downgrading the U.S. government's long-term debt to 'AA+' from 'AAA.

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DXY has crossed the psychological level of 102.50, which coincides with the 50-day MA. The focus of the bulls will now be on the mid-term trendline resistance.

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Despite disappointing economic data, gold prices remain unaffected due to continued safe-haven demand, which is benefiting the U.S. dollar. December gold prices are currently at $1,971, down 0.20% on the day. Analysts highlight $1,970 as a crucial support level, with a potential drop to $1,900 if it breaks.

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🕯 SELL GOLD | 1955 - 1952

🔴 SL: 1960

🟢 TP1: 1942
🟢 TP2: 1932

🕯 BUY GOLD | 1918 - 1915

🔴 SL: 1910

🟢 TP1: 1940
🟢 TP2: 1950

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After the employment survey was released, the US dollar (DXY index) declined due to falling Treasury yields. At the same time, gold prices increased to $1,940, influenced by changes in fixed-income investments.