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Hawkish Fed Comments Weigh on Gold Prices

Hawkish Fed Comments Weigh on Gold Prices

  • By Admin
Gold Under PressureGold prices are under pressure as we kick off the new week. The safe-haven was seen extending recent losses through the European open on Monday as hawkish Fed expectations once again take centre stage. Hawkish comments from several Fed members last week, including chairman Powell, have kept the prospect of further Fed rate hikes alive near-term, driving fresh strength in the Dollar and leaning gold prices.Further Tightening Still SeenLast week we heard a slew of Fed members calling on the likely need for further hikes in order to drive inflation lower. While not all commentary was firmly hawkish, the key message across the week was that it was too early to declare victory on inflation and, as such, further tightening might still be needed. Indeed, Powell himself warned that the Fed will continue to monitor incoming data and won’t hesitate to tighten further if necessary.US CPI DueOn the back of these comments, focus is now firmly fixed on the next US CPI reading due tomorrow. The market is looking for a further drop in annual inflation to 3.3% from 3.7%. If seen, this should dilute rate hike expectations, allowing gold some room to rebound. However, if we see any stickiness around prior levels or an unexpected uptick, this could well drive gold much lower as near-term Fed rate-hike pricing soars.Technical ViewsGoldThe failure above the 1973.51 level has seen the market reversing back beneath. With momentum studies bearish, the focus is on a further push lower and a test of the 1871.04 level and a retest of the broken bear channel highs. This will be a key support area for bulls to defend. If we break back above 1973.51, however, focus will shift back to 2069.41.
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