Dow drops 377 points as oil, Treasury yields keep climbing

Gold prices fell 3% on Monday as worries about rising inflation due to high oil prices increased the likelihood of further interest rate hikes by the Federal Reserve (Fed). The commodity's value dropped to $4,156, the lowest level since August 5, 2022. The ongoing conflict between Iran and the US over the Strait of Hormuz has led to volatile oil prices, which has weighed on gold as a safe-haven asset and an inflation hedge.

The 10-year US Treasury yield reached 5.23%, the highest since 2007, indicating a higher opportunity cost of holding non-yielding assets like gold. The 70% chance of a rate hike in October, as seen by traders, added pressure on the US Dollar, which pushed gold prices down. Technical analysis indicates that gold is in a bearish near-term trend, with price below both the 50-day and 100-day Simple Moving Averages (SMA) and further overhead 200-day SMA.

Momentum is negative, with the Relative Strength Index (RSI) at 36 and the Moving Average Convergence Divergence (MACD) indicator below zero. On the upside, initial resistance is at the 100-day SMA ($4,298) and 50-day SMA ($4,320), before the 200-day SMA ($4,540) as a major hurdle. On the downside, support is at the $4,150 level, with deeper support near $4,000.