Gold takes another wallop on the US session, down over 1% to key support and lows of $1,304

On Monday, Gold prices extended the bearish reversal of 7th Sep highs at $1,357.52 in the New York session as the global market’s appetite for risk remained robust, leaving stocks in favor for now.

The supply made for the fifth decline in six sessions as investors piled into the US benchmarks making for the lowest level in gold in more than three weeks. Bears took the precious metal off a cliff from $1,313.32 down to $1,304.60 the low on a spot basis while December gold fell $14.40, or 1.1%, to settle at $1,310.80 an ounce, the lowest finish since August 25th. 

While the N.Korean trade seems to have receded, the nuclear threat does still cloud market sentiment, especially in light of the annual gathering of world leaders at the United Nations in New York that started this week. President Trump's fellow leaders at the annual gathering of 193 delegations are listening for signs of how closely he will align himself with the U.N. in the face of a series of international challenges, including  Syria, Iran and North Korea. Trump will fully address the 193-member body for the first time on Tuesday. However, speaking at the opening session of the four-day conference today, Trump criticized the United Nations as being overburdened with bureaucracy and urged reform. For the meantime, and with no increased provocations around the Korean Peninsula, investors are moving out of the safe havens such as gold, but also the yen and U.S. Treasurys, looking to place idle capital into higher yielding and more-risky asset classes.

Why this Fed meeting won’t be a non-event - ING

The next major event for Gold will be the FOMC who's members will gather on Tuesday and Wednesday. The outcome of the event is likely centered around its plans to allow the runoff of its massive balance sheet beginning sometime in October. However, there should also be some caution around the event in respect to the Fed's dot plot. The US dollar, negatively correlated to gold, could find itself underwater should there be any further reductions in the dot plot given the amount of risks to the US economy associated with the recent domestic weather disasters, various geopolitical tensions and the lacklustre US inflation dynamics, raising the bar for gold bugs to get long/longer at opportune prices this week.  

Gold levels

Technically, the resistance level are $1,316, $1,322 and $1,334 while support levels are seen at $1,305, $1,300 and $1,298.66.