Israeli Prime Minister announces the dissolution of the wartime cabinet, is the price of gold about to plunge?

foreign exchange documentary platform- On Monday (June 17), despite the weakness of the US dollar, spot gold still fell significantly, and the price of gold fell below $2,310 per ounce at one point. In terms of the situation in the Middle East, on Monday local time, Israeli Prime Minister Benjamin Netanyahu announced that the wartime cabinet had been dissolved.

FXStreet analyst Christian Borjon Valencia pointed out on Tuesday that gold prices have started the week poorly as higher Treasury yields have dented interest in the non-interest-bearing asset.

The dollar index closed down 0.16% on Monday at 105.34.

Spot gold closed down $13.09, or 0.56%, at $2319.01 an ounce on Monday; gold prices hit an intraday low of $2309.87 an ounce.

Federal Reserve officials last week decided to keep interest rates on hold and revised their expectations for three rate cuts later this year to one.

Valencia noted that gold was on the defensive as Treasury yields rose as Federal Reserve officials remained hawkish. The yield on the 10-year Treasury rose nearly 6 basis points to 4.281 per cent on Monday.

Vladimir Zernov, an independent trader and analyst at Fxempire, predicted that gold would come under pressure as traders focused on rising Treasury yields.

Over the weekend, Minneapolis Fed President Neel Kashkari said the Fed would wait until December to cut interest rates, which would cut the opportunity cost of holding gold and make it more attractive to investors.

"We need to see more evidence to convince us that inflation is on its way back down to 2 per cent," Mr. Kashkari said in an interview.

Kashkari said the Federal Reserve is in a good position, but if there is only one rate cut, as the median suggests, it is likely to be by the end of the year.

Gold prices are also under pressure after the People's Bank of China halted an 18-month buying spree. The central bank's gold holdings held steady at 72.80 million ounces in May.

Valencia said upcoming U.S. economic data, including retail sales and industrial production, would affect gold prices.

Jim Wyckoff, senior market analyst at Kitco Metals, said: "The gold market does lack significant new fundamental news, so it is looking to external markets for direction. Gold prices are likely to trade sideways between $2,300 and $2,400 until the next major fundamental catalyst, which may not happen until some point in July."

In addition, traders are closely monitoring upcoming comments from New York Fed President John Williams, Philadelphia Fed President Patrick Harker, and Federal Reserve Governor Lisa Cook.

U.S. retail sales data on Tuesday, initial jobless claims last week on Thursday, and preliminary purchasing managers' index readings on Friday are expected to give investors a clearer picture of current consumption and economic strength.

Israeli Prime Minister Benjamin Netanyahu has announced that his wartime cabinet has been dissolved

On June 17 local time, Israeli Prime Minister Benjamin Netanyahu announced that the wartime cabinet had been dissolved.

According to the Israel Public Broadcasting Corporation News Channel, Netanyahu made the decision to dissolve the wartime cabinet after Israeli National Security Minister Ben Gwer asked to join the Israeli wartime cabinet.

Prime Minister Benjamin Netanyahu said the wartime cabinet was formed at the request of and in agreement with Gantz, the leader of Israel's main opposition party, the National Unity Party, according to David Menser, a government spokesperson. Now that Gantz has left, the wartime cabinet is no longer needed. The Israeli security cabinet will make decisions together with the Israeli cabinet.

Gantz, a member of Israel's wartime cabinet and leader of the main opposition National Unity Party, announced his withdrawal from the wartime cabinet at a press conference on the evening of June 9 and called for Israel to hold early parliamentary elections.

After a new round of Israeli-Palestinian conflict broke out on October 7 last year, Israel formed a five-member wartime cabinet, and Gantz became the three core members with voting rights, along with Netanyahu and Defense Minister Gallant.

How to trade gold after a significant correction?

Valencia pointed out that the outlook for gold prices is neutral to bearish as head and shoulders remain intact. Momentum indicators show that sellers are building momentum as the Relative Strength Index (RSI) falls further into bearish territory, opening the door for further declines.

Valencia said that if gold prices fall below $2,300 an ounce, the first support level would be the May 3 low of $2,277 an ounce, followed by the March 21 high of $2,222 an ounce.

If gold falls below the above level, there is further room for gold prices to decline, and sellers may focus on the head and shoulders target of $2,170/oz to $2,160/oz.

(Daily chart of spot gold)

Valencia added that if gold prices rebound and break through the June 7 cycle high of $2,387 an ounce, then gold prices will be ready to test the $2,400 an ounce mark.

At 08:00 Beijing time, spot gold was quoted at 2321.88 US dollars per ounce.