Skip to content

CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Market update: Gold price takes a tumble as US dollar soars post Fitch downgrade

The gold price appears directionless despite moves in other markets; the Fitch announcement might see pressure on risk assets and haven asset tailwinds and if volatility may emerge in the gold price.

Source: Bloomberg

The gold price steadied into the Asian session on Wednesday after a selloff into the New York close overnight.

The price action comes after Fitch, a large credit rating agency, downgraded the US sovereign debt credit rating to AA+ from AAA.

The agency “expected fiscal deterioration over the next three years, a high and growing general government debt burden, and the erosion of governance relative to ‘AA’ and ‘AAA’ rated peers over the last two decades”.

Ironically in early trade, Treasuries rallied in price and yields dipped as risk aversion appeared to outweigh the implication for US Government borrowing costs.

However, yields had made notable gains in the US session with the benchmark 10-year note trading near 4.06% before dipping below 4% today.

The announcement from Fitch came after the close of the Wall Street cash session, but futures are moving lower in the aftermath. APAC equities are similarly priced in a soft day ahead.

If the theme of risk aversion continues throughout the day, then gold might see an uptick in volatility.

The GVZ index is a measure of implied volatility for gold that is calculated in a similar way to the VIX index’s interpretation of volatility for the S&P 500. Gold volatility has been languishing and might indicate a lack of conviction for direction in price.

US dollar gyration may also impact the gold price.

Spot gold against US 10-year Treasury yield, DXY (USD) index and GZV index

Source: TradingView

Gold technical analysis

The gold price remains near the middle of its almost five-month range between 1885 and 2062. It also lies close to the 10-, 21-, 34- and 100-day simple moving averages (SMA) which may imply a lack of directional confidence in the gold market.

The lower bound of the range could see notable support lie in the 1885 – 1895 area.

In that zone, there are a couple of prior lows, a breakpoint, the 200-day SMA and the 38.2% Fibonacci retracement level of the move from 1614 up to 2062.

Further down the 50% Fibonacci retracement at 1838 might lend support.

On the topside, resistance might be at the recent peak of 1897 or the breakpoint near 2000.

Gold futures daily chart

Source: TradingView

This information has been prepared by DailyFX, the partner site of IG offering leading forex news and analysis. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.


This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Plan your trading week

Get the week’s market-moving news sent directly to your inbox every Friday. The Week Ahead gives you a full calendar of upcoming economic events, as well as commentary from our expert analysts on the key markets to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.