Gold Price Nears Death Cross As GLD And IAU ETFs Outflows Jump

Gold price continued its downward trend and is about to flash a death cross pattern as inflation jumps and top ETF outflows continued. It dropped to $4,540, down by 19% from its highest point this year. 

Gold Price Drops As ETF Outflows Continue And Risk Remain

American investors are dumping their gold ETF assets. Data shows that the SPDR Gold Shares ETF has had over $4.8 billion in outflows this year. The iShares Gold Trust (IAU) has shed over $1.9 billion in the same period.

These outflows have increased as odds that the Federal Reserve will cut interest rates ease. In a statement to Fox News, Jeff Gundlach, the billionaire founder of DoubleLine Capital, warned that it was not possible for the bank to slash rates this year. He said:

"It's just not possible, in my view, to cut interest rates when the two-year Treasury is almost 50 basis points higher than the Fed funds rate."

The prediction market is also pointing to no rate cut this year. Polymarket and Kalshi polls show that most participants expect the bank to maintain rates unchanged between 3.50% and 3.75%.

The bond market is also sending signals that the bank will not slash, with the ten-year yield soaring to 4.6%. Also, the two-year yield has recently crossed the 4% milestone. 

US inflation has jumped to 3.8%, and this trend may continue if the US restarts its war against Iran. In a TruthSocial post, President Donald Trump warned Iran that time was running out. There are also reports that his officials are considering a severe attack. 

A resumption of the war would lead to higher crude oil prices, a development that would negatively impact gold, which thrives in a low-interest-rate environment.

Gold Nears A Death Cross Pattern

<figure class="wp-block-image size-large"><figcaption class="wp-element-caption">Gold price chart | Source: TradingView</figcaption></figure>

The daily chart shows that gold peaked at $5,603 in January and has now pulled back to $4,540 today. There is a risk that this pullback will continue in the near future as it is about to form a death cross.

A death cross happens when the 50-day and 200-day weighted moving averages cross each other. The spread between the two has continued narrowing in the past few days. 

If this happens, there is a risk that gold price will drop to $4,093, its lowest point in March this year. This retreat is about 10% below the current level.?

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