Gold Struggles for Direction

On the other hand, gold remains stable despite soaring US yields and a strengthening US dollar. However, the question is, will gold decline to catch up to yields and the dollar, or the other way around?

Housing market cools

According to information released by Freddie Mac on Thursday, the average rate on a 30-year fixed mortgage increased last week to 5.78%, the highest level since November 2008 and the most significant weekly rise since 1987.

Fed Chair Jerome Powell stated that the housing market is going through a "reset" at a news conference on Wednesday. However, according to at least one analyst, the numbers released on Thursday make it appear that the term "reset" may not adequately capture the current dynamics in the housing market.

"The next few months will bring further, steep declines in housing construction, given the collapse in mortgage demand," Ian Shepherdson, chief economist at Pantheon Macro, wrote in a note following Thursday's housing starts data. "Chair Powell yesterday said the housing market is undergoing a 'reset'; it's much more than that."

Sideways movement

As previously said, volatility has been gradually declining as the metal trades in a sideways channel. However, these periods of low volatility are usually replaced with a massive movement once a new trend is established.

Thus, the resistance seems to be near the previous highs at 1,870 USD, and if broken to the upside, gold might quickly shoot above 1,900 USD.

On the other hand, the support seems to be in the 1,820 USD region. If not held, gold could decline to December lows at around 1,770 USD.