Gold prices retreated further on Wednesday due to the robust dollar. The US dollar showed strength from the beginning of the day against its commodity-rival, getting a boost early in the American session from upbeat US data, higher U.S. bond yields and rallying equities.
The US Richmond Fed Manufacturing Index showed an improvement to 12 in October, which is much better than the previous -3 and the expected 3. New Home Sales increased by 14% MoM in September and CB Consumer Confidence unexpectedly bounced in October, printing at 113.8 from an upwardly revised 109.8. As per the official report, “the proportion of consumers planning to purchase homes, automobiles, and major appliances all increased in October—a sign that consumer spending will continue to support economic growth through the final months of 2021.”
US inflation expectations jumped to the highest levels last seen during May 2006, which marks acute pressure on the Fed policymakers to consolidate the easy money streams. The same propels the US 2-year Treasury yields to the highest since May 2020.
Adding to it, the news of the US ban on China telecom over national security concerns and the Chinese summoning of the property companies to gauge the financial risk further puts downside pressure on the gold prices.
Analysts said the dollar might continue to hold steady pending a slew of central bank meetings and economic data that could shift views on interest rates, inflation and growth rates. “It is almost certain that a start to the Fed taper will be announced and U.S. yields should start to move higher as will the greenback and gold will struggle to hold near $1,800 in this environment.” Said an Analyst.
In the absence of any Fed communication, it will be the U.S. data that the market concentrates on this week. Now the market focus will be on 3Q GDP release on Thursday and the September core PCE deflator on Friday which will attract the most attention.
XAU/USD 4 Hour Chart:
Latest
Popular
Trending
Archives
Search
Top Tags