- Gold Prices has plummetted in the wake of a hawkish twist at the Fed.
- Bulls are now stepping in at the lowest levels since April and steepest daily drop since Jan 2021.
Update: Gold (XAU/USD) extends bounce off May’s monthly low to $1,785, up 0.65% intraday, during the early Friday’s trading. In doing so, the gold traders track mildly bid S&P 500 Futures, as well as a pullback in the US dollar index (DXY), to portray the consolidation near the multi-day low. The recovery moves could also be attributed to the key support structure on the monthly chart near $1,765-70. It should, however, be noted that the lackluster moves of the US Treasury yields and a light calendar, coupled with dead news feeds, probe the gold buyers.
It’s worth noting that gold dropped during the last five days on a stretch as concerns relating to the Fed’s bond-purchase tapering and rate hikes gain momentum. Though, downbeat inflation expectations seem to offer intermediate bounces.
Update: Gold (XAU/USD) snaps a five-day losing streak, up 0.12% around $1,775, amid a sluggish Asian session on Friday. The yellow metal dropped to the lowest since early May the previous day as the market’s rush to risk-safety, after the US Federal Reserve’s (Fed) rate hike signals, put a safe-haven bid under the US dollar and negatively affected gold prices.
However, a lack of major catalysts and increasing odds favoring the US President Joe Biden’s infrastructure spending plan passage seem to recently trigger gold’s corrective pullback from the key monthly support structure ranging from 2011 around $1,760-65. That said, S&P 500 Futures rise for the first time in three days, up 0.12% around 4,218 whereas the US 10-year Treasury yields seesaw near 1.51% by the press time.
Given the lack of major data/events in Asia, sentiment-related headlines and the market’s consolidation to the Fed-led moves will be the key to forecast gold’s immediate direction.
Gold prices collapsed through daily support by over 5.2% since Fed Chair Powell described this week’s Federal Open Market Committee meeting as the ‘talking about talking about’ meeting.
Gold bugs now fear that members are now seeking a plan to reduce the pace of QE and they have started to bail ship.
Crucially, the members are also bringing forward their projections from flat to +50bp in rate hikes by end-2023.
The combination has continued to percolate through markets with knee jerk reactions in the US dollar.
The DXY has powered ahead is trading at the highest since April 13, taking on the 92 level with a high after easily breaking above the 200-day moving average near 91.538.
Bulls now have sights on a test of the March 31 high near 93.437.
However, one of the key takeaways from the meeting for gold markets was the reaction in the 10-year breakeven inflation rates that are down 6 bp on the hawkish hold.
”That is, the market has…
Go to the news source: XAU/USD recovers to $1,785, snaps five-day downtrend on USD pullback