- Gold pulls back after hitting resistance near $4,200
- Renewed Hormuz attacks keep Fed rate hike bets on the table
- Hawkish Fed minutes likely to send gold closer to $4,000
- A break lower could carry larger bearish implications
pulled back yesterday and it is extending its slide today, after finding resistance near the $4,200 region amid renewed attacks on shipping in the Strait of Hormuz. rebounded modestly, and Treasury yields somewhat rose, an indication that investors got a little bit worried about inflation.
Expectations of higher by the end of the year remained firmly on the table, perhaps also aided by the for June. Although the headline print eased by half a point, it continued pointing to expansion with the prices charged subindex slightly declining but still pointing to sticky price pressures.
Attention will now turn to tomorrow’s . Investors will be eager to get more information about the Fed’s plans, especially after the new chair decided to remove the forward guidance from the statement and refrained from casting interest rate projections. Any hints that the Fed remains on track to raise interest rates could help Treasury yields and the to rise further, thereby weighing on gold.
This could bring the precious metal closer to the psychological round number of $4,000, which was briefly breached in the last couple of weeks. However, the bears did not achieve a clear close below that level and should they manage to do so now, larger declines may follow as the move would likely signal the continuation of the prevailing downtrend.
A clear close below $4,000 could increase the chances of a breach below the November lows at around $3,915, thereby paving the way towards the low of September 25 at $3,715. On the upside, the move signaling a trend reversal may be a strong rebound above the $4,345 zone, which currently coincides with the inflection point of the 50- and 200-day exponential moving averages.
