Gold has fallen below its 200-day moving average (200DMA), a widely followed long-term technical indicator that tracks the average closing price over the previous 200 trading days.
A break below the 200DMA is often interpreted as a sign that the long-term bullish momentum has weakened and that a broader trend reversal may be on the way. This is the first time gold has traded below the 200DMA since October 2023, and prices have now fallen below $4,300 per ounce. ounces.
The drop follows a huge rally that saw gold rise by nearly 200%, rising from below $2,000 an ounce in October 2023 to a record high of $5,600 in January this year. Much of this progress was driven by the “debasement trade,” the investment thesis that government spending, rising debt levels and loose monetary policy would erode the purchasing power of fiat currencies, increasing demand for scarce stores of value like gold.
Gold has now entered bear market territory after falling more than 20% from its all-time high. The latest weakness follows a stronger-than-expected US jobs report on Friday, which prompted markets to price in a greater likelihood of Federal Reserve tightening. The CME FedWatch Tool now assigns a rate hike of 25 basis points in December, which would raise the federal funds rate to a range of 3.75% to 4.00%.
Silver, which is often considered a higher beta version of gold due to its greater volatility, is currently testing support at its own 200DMA near $67 per ounce.
Bitcoin to gold ratio, which measures how many ounces of gold a bitcoin can buy, has risen 3% over the past 24 hours to 14.72 ounces as bitcoin recovers towards $63,000.
Despite the recovery, the ratio remains about 70% below its December 2024 peak of approximately 41 ounces. Last month, the ratio was rejected at its 200DMA, which preceded bitcoin’s fall below $60,000. However, the ratio remains above the February low, providing a modest sign of resilience for bitcoin bulls.
To add further pressure on risk assets, the US Dollar Index (DXY) has crawled back above 100. A stronger dollar is typically a headwind for commodities, gold and cryptocurrencies as it tightens global financial conditions, reduces liquidity and makes dollar-denominated assets more expensive for international investors.
