Gold Price Outlook – Support Looks Brittle as Rates Remain Elevated

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GOLD PRICE (XAU/USD), CHART, AND ANALYSIS

• Gold may slip back below $1,700/oz.
• US Treasury yields remain elevated.
• Retail traders continue to increase their net-long positions.

 

The recent sell-off in the precious metal is taking a breather after testing, and rejecting sub-$1,700/oz. levels at the end of last week. US Treasury yields remain at elevated and multi-year high levels, while the US dollar continues to hit peaks last seen over two decades ago. US dollar strength is also being supported by Euro weakness as the indefinite closure of the Nord Stream pipeline threatens European energy supplies.

The interest-rate sensitive UST 2-year is currently offered with a yield of just under 3.50%, a level last seen over 15 years ago. While this yield is unlikely to move noticeably higher, it is expected to remain at the current elevated level for the coming months as the Fed continues its fight against inflation.

The Fed is expected to hike rates by a further 75 basis points later this month, taking the target rate to 300bps - 325bps, and further increases are expected in the coming months to take the target rate to 375bps-400bps by late this year to early next year. The rest of this week is littered with Fed speakers, including Jerome Powell on Thursday, and their comments will need to be followed closely for any clue about the expected path of inflation in the months ahead.

 

Full article: Sep 6, 2022 | DailyFX
Nick Cawley, Strategist