Gold prices falling below psychological $1,900, profit taking ensues

• Gold prices are suffering a blow into the bell on Wall Street as profits are taken off.
• The US dollar is clawing back some ground as equities dwindle into the closing bell on Wall Street.

The price of gold is struggling to hold in at the vicinity of the $1,900s having scored a high of $1,898.35 and pulling back to a low of $1,878 in the last hour of trade on Wall Street. 

At the time of wiring, the yellow metal is trading at $1,887 having travelled between a day's low of $1,863 and the aforementioned highs, still up some 0.8% on the day so far. 

While gold and silver have enjoyed positive macro tailwinds for some time, the recent boost was the nail in the coffin for the bears waiting on some form of bearish conviction in price action below market structures that never came.

Support had been strong for the precious metal and technicals were screaming more upside within the burst from the $1,820s mid-week.

Meanwhile, the US dollar is picking up a bid as Wall Street draws to a close and equities sink. This could be seeing some profit-taking in gold's recent spike as the weekend draws near. 

"Dry-Powder analysis certainly highlights a growing breadth of traders long, suggesting that long positioning is relatively rich. After all, real-rates are nearing their post-GFC lows, while gold is also creeping close to its all-time high in nominal terms," analysts at TD Securities argued, who have just closed out their long position in gold. 

While we continue to expect higher gold prices to move into $2,000+ territory and lower real rates in the longer-term, we opt to take profits to protect against near-term adverse shock which, for instance, could drag inflation expectations lower faster than nominal rates, and we will look to tactically add to our gold going forward on any significant consolidation lower.

The market expects the Fed to do more

The Federal Reserve will be on traders map for the final sessions of the month next week as investors bank on lower real yields and more to come from the Fed to come. 

Such a scenario, coupled with the coronavirus spread and negative ramifications for an ebbing recovery in the US economy will likely continue to support gold on over the medium term, weighing on the greenback as well. 

Gold levels