Rationale of the recent decline in gold prices
Gold prices have been moving lower in past six days. They were poised to test support levels near the August lows at 1,302 and at 1,296.7 (61.8% Fibonacci retracement). Resistance is seen near the 50-day moving average at 1,327 (38.2 % Fibonacci). If it is broken, the upward trend will proceed towards the next high at 1,347. A break of the 1,302 support line could cause a further downward movement to the 1,296 level (61,8 % Fibonacci).
The gold prices drifted lower as the US dollar gained additional strength on the long-awaited U.S. manufacturing data released on Monday. Investors will be looking for the next portion of reports (the U.S. non-farm payrolls report, in particular) coming on Friday to get some clues about whether the Fed will raise rates at its next meeting in November, or stand pat once again. Why the rate hike may lead to the decline of gold prices is that gold doesn't bring yield unlike money assets.
The recent Theresa May’s announcement about the fixed date for the “hard Brexit” had a little impact on the gold prices. In contrast, the news on the settlement of the Deutsche Bank case with the US Department of Justice, boosted appetites among the investors and make them to take risks and scooch their money to less secure financial assets from gold.
The lack of volatility in financial markets could be considered as the main reason of the recent decline in gold prices; but it should last long, once we notice some great events looming on the horizon.