The gold downtrend reversed on Wednesday and then, after Thursday’s correction, continued its way on Friday towards $1,730. This gold price action directly reacted to the US dollar and Bond yields. Since we are not sure about the market reaction to the FED policies, therefore not sure, we should get too excited about gold’s resurgence. Rebound in gold’s price means the market is already priced in a 75-basis point rate hike, and the US dollar is peaked, so we have to wait for a little bit of correction.
Investors are waiting for US inflation data early next week.
US Treasury yields eased slightly on Friday, with the yield on the 10-year benchmark at 3.257% from yesterday’s 3.3284, which came after USD ease. Now investors are waiting for US inflation data early next week. The dollar is going to print its first weekly fall in four on Friday, as a hawkish statement and sharp rate hike by European Central Bank lifted the Euro and strengthened the basket of six currencies against the dollar. Euro raised 1.1% to a three-week high of $1.01105, a day after the ECB raised its key interest rate by unprecedented 75 basis points.
The following gold trend will create after the FED meeting, and before that, side movement around the same known area can continue. From the technical point of view, $1,680 support continues to hold for now, and on the flip side, a break of $1,730 could indicate a much more significant corrective move in terms of changing the trend in the bigger picture. However, as mentioned above, given the backdrop of hawkish FED and immense market uncertainty, I am not sure investors are ready to sell the dollar yet.