Gold Price Forecast: Gold Tests $4,000–$4,200 Support Zone as US Yields Surge

Gold is running away from the rising interest rates in the US, as the CPI numbers came out hot, pushing yields even higher at this point.

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The gold market has fallen rather significantly during the course of the trading session here on Wednesday, as the market is reacting to CPI numbers coming out of the United States hotter than anticipated. Therefore, it suggests that Federal Reserve policymakers may have to stay tight for longer, or perhaps even raise interest rates quicker.

There is a lot of fear out there when it comes to the idea of rates overtaking the markets. If that ends up being the case, then non-yielding assets such as gold really take it on the chin.

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That being said, we are in a big demand zone between $4,000 and $4,200.

So, I am not necessarily looking at this as a market that is being threatened with a massive breakdown quite yet. But we are starting to see things pile up here that could be negative overall.

On the other hand, if we were to turn around and break above the $4,250 level, and rates start to turn around in America and start dropping, that would be good. The market could set up for a short-term bounce if we get dropping rates in America as well.

The $4,000 level being violated to the downside, though, would be an ugly turn of events, and it would almost certainly have the U.S. dollar screaming higher in general. Ultimately, I do like gold longer term, but as things stand right now, it is very difficult for gold to find a super bullish case from a longer-term standpoint.

Ultimately, this is a market that I think will remain noisy, and it will pay close attention to these rates going forward. This market continues to be noisy, but the correlation will continue to be one you must follow.

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